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Elasticity of Substitution in the U.S. Market with Endogenous Transport Costs: a Sectoral Approach

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  • Danielken Molina

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Abstract

Following Anderson and Wincoop (2004) we estimate the elasticityof substitution of the goods imported by the U.S. market for the period comprehended between 1990 - 2003. Our estimates take advantage of the data ontransport costs available at six digit commodity level of the U.S. import datapublished by the U.S. Census Bureau.We obtain two different estimates of the elasticity of substitution; one atthe average aggregate level and a second one at the sectoral level. As expected, the estimates that take into account the endogeneity of transport costs are statistically different in one unit from the results obtained when we ignore the structure of transport costs. This difference is even higher when we compare the results obtained using the sectoral classification at the two digit level of the ISIC revision 2 classification.** En este artículo se presentan estimaciones de la elasticidad de sustitución de bienes importados al mercado de los EEUU en el periodo 1990{2003, siguiendo a Anderson y Wincoop (2004). Estas estimaciones aprovechan la disponibilidad de la información sobre costos de transporte de bienes publicada por la Oficina del Censo de los Estados Unidos, desagregándola a seis dígitos.Se obtienen dos estimaciones diferentes de la elasticidad de sustitución: unaa nivel agregado promedio y otra a nivel sectorial. Como puede esperarse, lasestimaciones que tienen en cuenta la endogeneidad de los costos de transporteson estadísticamente diferentes en un punto porcentual a los resultados obtenidos cuando no se contempla la estructura de los costos de transporte. Esta diferencia es incluso superior cuando comparamos los resultados obtenidos utilizando la clasificación sectorial a nivel de dos dígitos de la clasificación ISIC revisión 2.

Suggested Citation

  • Danielken Molina, 2009. "Elasticity of Substitution in the U.S. Market with Endogenous Transport Costs: a Sectoral Approach," REVISTA DE ECONOMÍA DEL ROSARIO, UNIVERSIDAD DEL ROSARIO, May.
  • Handle: RePEc:col:000151:006215
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    References listed on IDEAS

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    1. James E. Anderson & Eric van Wincoop, 2004. "Trade Costs," Journal of Economic Literature, American Economic Association, vol. 42(3), pages 691-751, September.
    2. Micco, Alejandro & Serebrisky, Tomas, 2006. "Competition regimes and air transport costs: The effects of open skies agreements," Journal of International Economics, Elsevier, vol. 70(1), pages 25-51, September.
    3. Christian Broda & David E. Weinstein, 2006. "Globalization and the Gains From Variety," The Quarterly Journal of Economics, Oxford University Press, vol. 121(2), pages 541-585.
    4. John Romalis, 2007. "NAFTA's and CUSFTA's Impact on International Trade," The Review of Economics and Statistics, MIT Press, vol. 89(3), pages 416-435, August.
    5. Limao, Nuno & Venables, Anthony J., 1999. "Infrastructure, geographical disadvantage, and transport costs," Policy Research Working Paper Series 2257, The World Bank.
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    More about this item

    Keywords

    Elasticity of substitution; Transport Costs; ISIC Classification. ** Elasticidad de Sustitución; Costos de Transporte; Clasificación ISIC.;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

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