Spectral estimation of secular and cyclical elasticities for bilateral trade
The paper uses spectral methods to estimate income and price elasticities for trade among Canada, Germany, Japan, the United Kingdom, the United States, other industrial countries, OPEC, and non-OPEC developing countries. By focusing on bilateral trade data, the paper avoids the aggregation biases associated with multilateral data. By differentiating between secular and cyclical elasticities, the paper recognizes that trade responses to secular expansions and to domestic bottlenecks need not be the same. Finally, by relying on spectral analysis, the paper isolates the secular and cyclical components of the data and thus avoids the drawbacks of time-domain analyses where a time trendproxies secular factors. To emphasize the usefulness of bilateral trade elasticities, the analysis re-examines the asymmetry in income elasticities noted by Houthakker and Magee and evaluates the loss of information associated with relying on multilateral trade data.
Volume (Year): 5 (1992)
Issue (Month): 2 (Autumn)
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- Engle, Robert F, 1974.
"Band Spectrum Regression,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 15(1), pages 1-11, February.
- Marston, Richard, 1971. "Income effects and delivery lags in British import demand: 1955-1967," Journal of International Economics, Elsevier, vol. 1(4), pages 375-399, November.
- Haynes, Stephen E & Stone, Joe A, 1983. "Secular and Cyclical Responses of U.S. Trade to Income: An Evaluation of Traditional Models," The Review of Economics and Statistics, MIT Press, vol. 65(1), pages 87-95, February.
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