Long-Run Industry-Level Estimates of U.S. Armington Elasticities

USITC Working Paper No. 2000-09a

30 Pages Posted: 8 Jan 2001

See all articles by Christine A. McDaniel

Christine A. McDaniel

George Mason University - Mercatus Center

Michael P. Gallaway

Exxon Mobil Corporation

Sandra A. Rivera

U.S. International Trade Commission, Economic Research Division

Date Written: October 2000

Abstract

A key relationship for trade policy analysis is the degree of substitution between imported and domestic goods due to changes in the relative price of those two goods, commonly known as the Armington elasticity. We estimate Armington elasticities for 312 industries at the 4-digit SIC level over the period 1989 to 1995. Our estimation results offer the most comprehensive, disaggregated, and up-to-date set of Armington elasticities. We report long-run estimates when possible, and find that long-run estimates are on average twice as large as the short-run estimates. This is important since the long-run estimates are more appropriate for most trade policy analysis than the short-run estimates. Further, it is shown that statistically significant differences exist within most 3-digit SIC industries, which highlights the importance of estimation at a disaggregated level since policy changes are typically focused on narrow product definitions.

Keywords: Trade, Econometric and Statistical Methods

JEL Classification: F1, C1

Suggested Citation

McDaniel, Christine A. and Gallaway, Michael P. and Rivera, Sandra A., Long-Run Industry-Level Estimates of U.S. Armington Elasticities (October 2000). USITC Working Paper No. 2000-09a, Available at SSRN: https://ssrn.com/abstract=249027 or http://dx.doi.org/10.2139/ssrn.249027

Christine A. McDaniel (Contact Author)

George Mason University - Mercatus Center ( email )

3434 Washington Blvd., 4th Floor
Arlington, VA 22201
United States
703-993-9228 (Phone)

Michael P. Gallaway

Exxon Mobil Corporation ( email )

Irving, TX

Sandra A. Rivera

U.S. International Trade Commission, Economic Research Division ( email )

500 E Street, SW
Washington, DC 20436
United States