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Import Demand Elasticities and Trade Distortions

Author

Listed:
  • Hiau Looi Kee

    (The Development Research Group of the World Bank.)

  • Alessandro Nicita

    (The Development Research Group of the World Bank. Nicita is also affiliated with UNCTAD in Geneva.)

  • Marcelo Olarreaga

    (The Development Research Group of the World Bank. Olarreaga is also affiliated with the University of Geneva, and CEPR in London.)

Abstract

This paper provides a systematic estimation of import demand elasticities for a broad group of countries at a very disaggregated level of product detail. We use a semiflexible translog GDP function approach to formally derive import demands and their elasticities, which are estimated with data on prices and endowments. Within a theoretically consistent framework, we use the estimated elasticities to construct Feenstra's (1995) simplification of Anderson and Neary's trade restrictiveness index (TRI). The difference between TRIs and import-weighted tariffs is shown to depend on the tariff variance and the covariance between tariffs and import demand elasticities. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Suggested Citation

  • Hiau Looi Kee & Alessandro Nicita & Marcelo Olarreaga, 2008. "Import Demand Elasticities and Trade Distortions," The Review of Economics and Statistics, MIT Press, vol. 90(4), pages 666-682, November.
    • Handle: RePEc:tpr:restat:v:90:y:2008:i:4:p:666-682
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    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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