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Import price elasticities: reconsidering the evidence Author info | Abstract | Publisher info | Download info | Related research | Statistics Hélène Erkel-Rousse
Daniel Mirza
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Recent economic geography and trade empirical studies based on monopolistic competition suggest high levels of trade price elasticities (between 3 and 11). However, price elasticity estimations in trade equations using unit values as price proxies usually lead to lower values of around unity. We show that those inconclusive results may be due to some misspecification in these equations as well as measurement errors in prices. When suitable instrumental variables are used, within a panel of industrialized countries, we obtain high price elasticities, the majority ranging from 1 to 13. The highest estimates correspond to industries producing homogeneous goods.
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Article provided by Canadian Economics Association in its journal Canadian Journal of Economics .
Volume (Year): 35 (2002)
Issue (Month): 2 (May)
Pages: 282-306
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Handle: RePEc:cje:issued:v:35:y:2002:i:2:p:282-306Contact details of provider: Postal: Canadian Economics Association Prof. Steven Ambler, Secretary-Treasurer c/o Olivier Lebert, CEA/CJE/CPP Office C.P. 35006, 1221 Fleury Est Montréal, Québec, Canada H2C 3K4 Email: Web page: http://economics.ca/cje/ More information through EDIRC
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Find related papers by JEL classification: C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables F1 - International Economics - - Trade
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