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“Another Empirical Look at the Theory of Overlapping Demands - Un altro sguardo empirico alla teoria delle overlapping demands

Author

Listed:
  • Dharmendra Dhakal

    (Department of Economics and Finance, Tennessee State University, Nashville, Tennessee, USA)

  • Gyan Pradhan

    (Department of Economics, Eastern Kentucky University)

  • Kamal P. Upadhyaya

    (Department of Economics and Finance, University of New Haven)

Abstract

Linder’s theory of overlapping demands suggests that international trade in manufactured goods will be stronger between countries with similar per capita income levels. In this paper, we test the Linder hypothesis for five East Asian countries using panel data for five years. In addition to including bilateral trade data for these countries, we include their bilateral trade data with their other major trading partners. A modified gravity model is developed for this purpose. The model is first estimated for each year in the sample. In addition, a panel data set is constructed and estimated using a fixed-effects estimator. The overall results of our estimations are quite robust and do not provide support for Linder’s hypothesis. - Secondo la teoria delle overlapping demands di Linder, il commercio internazionale di beni manufatti risulterebbe essere maggiore tra i paesi che presentano livelli di reddito procapite simili. In questo studio tale teoria viene applicata a cinque paesi dell’est asiatico utilizzando dati panel per un periodo di cinque anni. Oltre a considerare i dati del commercio bilaterale tra questi paesi, sono stati inclusi anche i dati del commercio bilaterale con gli altri principali partner commerciali. A questo proposito è stato sviluppato un modello gravitazionale modificato, stimato prima per ogni anno del campione. È stato realizzato un panel data set attraverso un fixed effect estimator. Le stime ottenute risultano nel complesso robuste e non forniscono evidenze a sostegno dell’ipotesi di Linder.

Suggested Citation

  • Dharmendra Dhakal & Gyan Pradhan & Kamal P. Upadhyaya, 2011. "“Another Empirical Look at the Theory of Overlapping Demands - Un altro sguardo empirico alla teoria delle overlapping demands," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 64(1), pages 103-113.
    • Handle: RePEc:ris:ecoint:0610
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    References listed on IDEAS

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    1. Carmen Fillat-Castejon & Jose Ma Serrano-sanz, 2004. "Linder Revisited: Trade and Development in the Spanish Economy," International Review of Applied Economics, Taylor & Francis Journals, vol. 18(3), pages 323-348.
    2. Thomas Kennedy & Richard McHugh, 1983. "Taste similarity and trade intensity: A Test of the linder hypothesis for United States exports," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 119(1), pages 84-96, March.
    3. Thursby, Jerry G & Thursby, Marie C, 1987. "Bilateral Trade Flows, the Linder Hypothesis, and Exchange Risk," The Review of Economics and Statistics, MIT Press, vol. 69(3), pages 488-495, August.
    4. Changkyu Choi, 2002. "Linder hypothesis revisited," Applied Economics Letters, Taylor & Francis Journals, vol. 9(9), pages 601-605.
    5. Peter Chow & Mitchell Kellman Yochanan, 1999. "A test of the Linder hypothesis in Pacific NIC trade 1965-1990," Applied Economics, Taylor & Francis Journals, vol. 31(2), pages 175-182.
    6. Carsten Fink & Beata Smarzynska Javorcik & Mariana Spatareanu, 2005. "Income-Related Biases in International Trade: What Do Trademark Registration Data Tell Us?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 141(1), pages 79-103, April.
    7. World Bank, 2006. "World Development Indicators 2006," World Bank Publications - Books, The World Bank Group, number 8151, April.
    8. Bergstrand, Jeffrey H, 1990. "The Heckscher-Ohlin-Samuelson Model, the Linder Hypothesis and the Determinants of Bilateral Intra-industry Trade," Economic Journal, Royal Economic Society, vol. 100(403), pages 1216-1229, December.
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    More about this item

    Keywords

    Linder Hypothesis; East Asian Countries; Panel Data;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General

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