IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Is the "Houthakker-Magee" Finding Durable? Evidence from Disaggregated Trade Flows between China and Korea

  • Kichun Kang

    (School of Economics and Finance, Yeungnam University)

Using income growth to explain trade flows has a long history in international trade. This paper examines the income elasticities for the categories of goods to be consistent with the theoretical implications, using the trade flows between China and Korea over the sample period of 1991-2008. The new trade theory implies that the inclusion of new variety terms reduces the magnitude of income elasticities, disaggregation of trade flows yields different magnitudes of income elasticity, and income elasticity of differentiated goods is higher than that of homogeneous goods. The empirical findings are consistent with the implication from the new trade theory. However, the asymmetry in income elasticity (Houthakker-Magee finding) is quite durable. This paper enhances the consistency between the theories and evidence.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://down.aefweb.net/AefArticles/aef130203Kang.pdf
Download Restriction: no

Article provided by Society for AEF in its journal Annals of Economics and Finance.

Volume (Year): 13 (2012)
Issue (Month): 2 (November)
Pages: 299-316

as
in new window

Handle: RePEc:cuf:journl:y:2012:v:13:i:2:n:3:kang
Contact details of provider: Web page: http://www.aeconf.net/

More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Houthakker, Hendrik S & Magee, Stephen P, 1969. "Income and Price Elasticities in World Trade," The Review of Economics and Statistics, MIT Press, vol. 51(2), pages 111-25, May.
  2. Rauch, James E., 1999. "Networks versus markets in international trade," Journal of International Economics, Elsevier, vol. 48(1), pages 7-35, June.
  3. Robert C. Feenstra & Clinton R. Shiells, 1994. "Bias in U.S. Import Prices and Demand," NBER Working Papers 4841, National Bureau of Economic Research, Inc.
  4. Robert Feenstra & Hiau Looi Kee, 2004. "On the Measurement of Product Variety in Trade," American Economic Review, American Economic Association, vol. 94(2), pages 145-149, May.
  5. Tamim Bayoumi, 1999. "Estimating Trade Equations From Aggregate Bilateral Data," IMF Working Papers 99/74, International Monetary Fund.
  6. Feenstra, Robert C, 1994. "New Product Varieties and the Measurement of International Prices," American Economic Review, American Economic Association, vol. 84(1), pages 157-77, March.
  7. Joseph E. Gagnon, 2007. "Productive Capacity, Product Varieties, and the Elasticities Approach to the Trade Balance," Review of International Economics, Wiley Blackwell, vol. 15(4), pages 639-659, 09.
  8. Pinelopi K. Goldberg & Michael M. Knetter, 1996. "Goods Prices and Exchange Rates: What Have We Learned?," NBER Working Papers 5862, National Bureau of Economic Research, Inc.
  9. Mariam Camarero & Cecilio Tamarit, 2003. "Estimating exports and imports demand for Manufactured goods: The role of FDI," European Economy Group Working Papers 22, European Economy Group.
  10. Catherine L. Mann & Katharina Plück, 2005. "The US Trade Deficit: A Disaggregated Perspective," Working Paper Series WP05-11, Peterson Institute for International Economics.
  11. Barrell, Ray & Dées, Stéphane, 2005. "World trade and global integration in production processes: a re-assessment of import demand equations," Working Paper Series 0503, European Central Bank.
  12. Paul S. Armington, 1969. "A Theory of Demand for Products Distinguished by Place of Production (Une théorie de la demande de produits différenciés d'après leur origine) (Una teoría de la demanda de productos distinguiénd," IMF Staff Papers, Palgrave Macmillan, vol. 16(1), pages 159-178, March.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:cuf:journl:y:2012:v:13:i:2:n:3:kang. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Qiang Gao)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.