Inequality and the US import demand function
In this paper we investigate the empirical importance of changes in inequality on the demand for imports by examining US data from 1948 to 2007. We find evidence of a long-run relationship of a standard imports equation including income inequality. The existence of a cointegrating equation in imports, income, relative prices and inequality exists not only for aggregate real imports but also for more disaggregated categories as well. The evolution of inequality seems to have a large and positive influence on the demand for imports in the US with the exception of imports of services whereas the impact of inequality on imports of durables is more ambiguous. Our results are robust to alternative methods of estimating cointegration equations.
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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
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.:
- Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
- Devashish Mitra & Vitor Trindade, 2003.
"Inequality and Trade,"
NBER Working Papers
10087, National Bureau of Economic Research, Inc.
- Katsimi, Margarita & Moutos, Thomas, 2011.
"Inequality and the US import demand function,"
Journal of International Money and Finance,
Elsevier, vol. 30(3), pages 492-506, April.
- Ekaterini Panopoulou & Nikitas Pittis, 2004. "A comparison of autoregressive distributed lag and dynamic OLS cointegration estimators in the case of a serially correlated cointegration error," Econometrics Journal, Royal Economic Society, vol. 7(2), pages 585-617, December.
- Harry P. Bowen & Edward E. Leamer & Leo Sveikauskas, 1986.
"Multicountry, Multifactor Tests of the Factor Abundance Theory,"
NBER Working Papers
1918, National Bureau of Economic Research, Inc.
- Bowen, Harry P & Leamer, Edward E & Sveikauskas, Leo, 1987. "Multicountry, Multifactor Tests of the Factor Abundance Theory," American Economic Review, American Economic Association, vol. 77(5), pages 791-809, December.
- Menzie D. Chinn, 2003.
"Doomed to Deficits? Aggregate U.S. Trade Flows Re-Examined,"
NBER Working Papers
9521, National Bureau of Economic Research, Inc.
- Menzie D. Chinn, 2005. "Doomed to Deficits? Aggregate U.S. Trade Flows Re-Examined," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 141(3), pages 460-485, October.
- Daron Acemoglu, 2002.
"Technical Change, Inequality, and the Labor Market,"
Journal of Economic Literature,
American Economic Association, vol. 40(1), pages 7-72, March.
- Daron Acemoglu, 2000. "Technical Change, Inequality, and the Labor Market," NBER Working Papers 7800, National Bureau of Economic Research, Inc.
- Peter C.B. Phillips, 1988.
"Optimal Inference in Cointegrated Systems,"
Cowles Foundation Discussion Papers
866R, Cowles Foundation for Research in Economics, Yale University, revised Aug 1989.
- Candelon, Bertrand & Lütkepohl, Helmut, 2000.
"On the reliability of chow type test for parameter constancy in multivariate dynamic models,"
SFB 373 Discussion Papers
2000,95, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
- Candelon, Bertrand & Lutkepohl, Helmut, 2001. "On the reliability of Chow-type tests for parameter constancy in multivariate dynamic models," Economics Letters, Elsevier, vol. 73(2), pages 155-160, November.
- Hunter, Linda, 1991. "The contribution of nonhomothetic preferences to trade," Journal of International Economics, Elsevier, vol. 30(3-4), pages 345-358, May.
- Dow, James & Werlang, Sérgio Ribeiro da Costa, 1991.
Economics Working Papers (Ensaios Economicos da EPGE)
176, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
- Margarita Katsimi & Thomas Moutos, 2005. "Inequality and Relative Reliance on Tariffs: Theory and Evidence," CESifo Working Paper Series 1457, CESifo Group Munich.
- Boyd, Derick & Caporale, Gugielmo Maria & Smith, Ron, 2001. "Real Exchange Rate Effects on the Balance of Trade: Cointegration and the Marshall-Lerner Condition," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 6(3), pages 187-200, July.
- Klaus Deininger & Lyn Squire, 1996.
"A New Data Set Measuring Income Inequality,"
CEMA Working Papers
512, China Economics and Management Academy, Central University of Finance and Economics.
- Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
- Bruce E. Hansen, 1996.
"Sample Splitting and Threshold Estimation,"
Boston College Working Papers in Economics
319., Boston College Department of Economics, revised 12 May 1998.
- Francois, Joseph F & Kaplan, Seth, 1996. "Aggregate Demand Shifts, Income Distribution, and the Linder Hypothesis," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 244-250, May.
- Peter C.B. Phillips & Bruce E. Hansen, 1988. "Statistical Inference in Instrumental Variables," Cowles Foundation Discussion Papers 869R, Cowles Foundation for Research in Economics, Yale University, revised Apr 1989.
- Paul Krugman, 1988.
"Differences In Income Elasticities and Trends in Real Exchange Rates,"
NBER Working Papers
2761, National Bureau of Economic Research, Inc.
- Krugman, Paul, 1989. "Differences in income elasticities and trends in real exchange rates," European Economic Review, Elsevier, vol. 33(5), pages 1031-1046, May.
- Peter C.B. Phillips & Mico Loretan, 1989.
"Estimating Long Run Economic Equilibria,"
Cowles Foundation Discussion Papers
928, Cowles Foundation for Research in Economics, Yale University.
- Ulrich R. Kohli, 1982. "Relative Price Effects and the Demand for Imports," Canadian Journal of Economics, Canadian Economics Association, vol. 15(2), pages 205-219, May.
- Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-1580, November.
- Creedy, John, 1977. "Pareto and the Distribution of Income," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 23(4), pages 405-411, December.
- Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
- Goldstein, Morris & Khan, Mohsin S., 1985. "Income and price effects in foreign trade," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 2, chapter 20, pages 1041-1105 Elsevier.
- Inder, Brett, 1993. "Estimating long-run relationships in economics : A comparison of different approaches," Journal of Econometrics, Elsevier, vol. 57(1-3), pages 53-68.
- Rose, Andrew K. & Yellen, Janet L., 1989. "Is there a J-curve?," Journal of Monetary Economics, Elsevier, vol. 24(1), pages 53-68, July.
- Grossman, Gene M, 1982. "Import Competition from Developed and Developing Countries," The Review of Economics and Statistics, MIT Press, vol. 64(2), pages 271-281, May.
- Rose, Andrew K., 1991. "The role of exchange rates in a popular model of international trade : Does the 'Marshall-Lerner' condition hold?," Journal of International Economics, Elsevier, vol. 30(3-4), pages 301-316, May.
- 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 111-125, May.
- Gonzalo, Jesus, 1994. "Five alternative methods of estimating long-run equilibrium relationships," Journal of Econometrics, Elsevier, vol. 60(1-2), pages 203-233.
- Peter Hooper & Karen H. Johnson & Jaime R. Marquez, 1998. "Trade elasticities for G-7 countries," International Finance Discussion Papers 609, Board of Governors of the Federal Reserve System (U.S.).
- Trefler, Daniel, 1995. "The Case of the Missing Trade and Other Mysteries," American Economic Review, American Economic Association, vol. 85(5), pages 1029-1046, December.
- Hongyi Li & Lyn Squire & Tao Zhang & Heng-fu Zou, 1999.
"A Data Set on Income Distribution,"
CEMA Working Papers
575, China Economics and Management Academy, Central University of Finance and Economics.
- Flam, Harry & Helpman, Elhanan, 1987. "Vertical Product Differentiation and North-South Trade," American Economic Review, American Economic Association, vol. 77(5), pages 810-822, December.
- Pesaran, M.H. & Shin, Y., 1995. "An Autoregressive Distributed Lag Modelling Approach to Cointegration Analysis," Cambridge Working Papers in Economics 9514, Faculty of Economics, University of Cambridge.
- Markusen, James R, 1986. "Explaining the Volume of Trade: An Eclectic Approach," American Economic Review, American Economic Association, vol. 76(5), pages 1002-1011, December.
- Jaime Marquez, 2000. "The Puzzling Income Elasticity of US Imports," Econometric Society World Congress 2000 Contributed Papers 1128, Econometric Society.
- Caporale, Guglielmo Maria & Panopoulou, Ekaterini & Pittis, Nikitas, 2005. "The Feldstein-Horioka puzzle revisited: A Monte Carlo study," Journal of International Money and Finance, Elsevier, vol. 24(7), pages 1143-1149, November.
When requesting a correction, please mention this item's handle: RePEc:eee:jimfin:v:30:y:2011:i:3:p:492-506. 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: (Shamier, Wendy)
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.