Trade liberalization and import demand: The Central American experience
We investigate the effect of trade liberalization on the price and income elasticities of demand for imports in five Central American economies. In contrast to recent studies, we find that liberalization has had little impact on import demand's sensitivity to price. However, the income elasticity is found to change significantly in three countries; doubling in two and halving in the third. Despite the similar characteristics and trade policies of the five economies, none of the explanations for structural change in import elasticities suggested in the literature can account for more than a minority of our results.
Volume (Year): 20 (2011)
Issue (Month): 2 ()
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