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Again on trade elasticities: evidence from a selected sample of countries

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  • Francesco Aiello
  • Graziella Bonanno
  • Alessia Via

Abstract

This paper focuses on trade elasticities by analysing the case of China, France, Germany, Italy, Japan, UK, and the USA over the period 1990–2012. While the empirical setting mainly refers to panel data techniques for non-stationary data, the VECM model complements the analysis at single-country level. After having shown that long-run relationships are stable to any structural break, it is found that exports and imports are price inelastic for most of the countries in the sample. Furthermore, exports and imports are determined by domestic and foreign income, with asymmetric income elasticities. This helps to explain why global trade imbalances are persistent. Copyright Eurasia Business and Economics Society 2015

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  • Francesco Aiello & Graziella Bonanno & Alessia Via, 2015. "Again on trade elasticities: evidence from a selected sample of countries," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 5(2), pages 259-287, December.
    • Handle: RePEc:spr:eurasi:v:5:y:2015:i:2:p:259-287
    DOI: 10.1007/s40821-015-0026-0
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    More about this item

    Keywords

    Trade elasticities; Global trade imbalances; Panel data; C23; F10; F17; F37; P33;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities

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