Arbeitspapier
Are Armington Elasticities Different across Countries and Sectors? – A European Study
CGE models are widely used for policy evaluation and impact analysis especially with respect to trade reforms, tax reforms, energy sector reform and development policy analysis. However, the results of such models are often argued to be sensitive to the choice of exogenous parameters such as trade elasticities. Several authors show that the choice of the so-called Armington elasticities in the import demand function has a strong influence on the simulation results. Most existing estimates of Armington elasticities are only for the US. The few studies for other countries find substantially differing results. Nevertheless, many CGE modelers simply adopt the elasticities from the literature. This paper aims at providing estimated elasticities based on recent data for a larger group of European countries. Using cointegration and panel fixed effects analyses we estimate the first order condition resulting from cost minimization or utility maximization subject to the CES subutility or cost function in imports and domestic goods. The results show a rather large variation across sectors and countries and the magnitude is only partly comparable to the US elasticities. Moreover, in a small CGE application we are able to show that changing the elasticity set has a quantitative and even qualitative impact on CGE model results, which confirms the concern that one might end up with biased results due to a misspecification of the elasticities.
- ISBN
-
978-3-86788-588-1
- Sprache
-
Englisch
- Erschienen in
-
Series: Ruhr Economic Papers ; No. 513
- Klassifikation
-
Wirtschaft
Empirical Studies of Trade
Computable General Equilibrium Models
Trade: Forecasting and Simulation
- Thema
-
Armington
trade elasticities
computable general equilibrium
Europe
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Olekseyuk, Zoryana
Schürenberg-Frosch, Hannah
- Ereignis
-
Veröffentlichung
- (wer)
-
Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI)
- (wo)
-
Essen
- (wann)
-
2014
- DOI
-
doi:10.4419/86788588
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:42 MEZ
Datenpartner
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Olekseyuk, Zoryana
- Schürenberg-Frosch, Hannah
- Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI)
Entstanden
- 2014
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