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Short-run and long-run food import elasticities with persistent trading habits

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  • Niemi, Janne

Abstract

This paper provides estimates and explores the role of own price import demand (Armington) elasticities between different source countries for five agricultural commodities in a framework that incorporates temporal dimension formulated as trading habit persistence. The estimations employ FAO’s bilateral food commodity trade database, complemented with importer and exporter country characteristics from other data. The results support the hypothesis that trade patterns are persistent the adjustment following price changes takes effect with delays. Apart from the evidence for the presence of habit persistence and hence different short and long-term elasticities in general, significant differences between countries are also evidenced, in particular between high- and low-income countries and between main geographic areas. Consistently with the barriers for market entry considerations we also observe higher persistence downwards than upwards.

Suggested Citation

  • Niemi, Janne, 2018. "Short-run and long-run food import elasticities with persistent trading habits," Working Papers 111, VATT Institute for Economic Research.
    • Handle: RePEc:fer:wpaper:111
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    File URL: https://www.doria.fi/handle/10024/165218
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    More about this item

    Keywords

    Armington elasticity; Trade; Habit persistence; Agricultural commodities; Business regulation and international economics; E71; F14; O19; Q17; Elinkeinopolitiikka;
    All these keywords.

    JEL classification:

    • E71 - Macroeconomics and Monetary Economics - - Macro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on the Macro Economy
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade

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