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Armington elasticities in intermediate inputs trade: a problem in using multilateral trade data

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  • Mika Saito

Abstract

. In this paper we find that the estimates of Armington elasticities (the elasticity of substitution between groups of products identified by country of origin) obtained from multilateral trade data can differ from those obtained from bilateral trade data. In particular, the former tends to be higher than the latter when trade consists largely of intermediate inputs. Given that the variety of intermediate inputs traded across borders is increasing rapidly and that the effect of this increase is not adequately captured in multilateral trade data, the evidence shows that the employment of multilateral trade data to estimate Armington elasticities needs caution. JEL classification: F14, C51 Elasticités d’Armington dans le commerce des intrants intermédiaires: un problème dans l’utilisation des données sur le commerce international multilatéral. Ce texte montre que les estimations des élasticités d’Armington (c’est‐à‐dire les élasticités de substitution entre groupes de biens d’origines différentes) basées sur les données de commerce multilatéral peuvent être différentes de celles obtenues en utilisant des données de commerce bilatéral. En particulier, les premières sont en général supérieures aux secondes lorsque les échanges concernent surtout des biens intermédiaires. Comme la variété des biens intermédiaires échangés augmente rapidement et que les effets de cette augmentation ne sont pas capturés de façon adéquate dans les données de commerce multilatéral, notre résultat suggère la prudence lors de l’estimation des élasticités d’Armington à partir de données de commerce multilatéral.

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  • Mika Saito, 2004. "Armington elasticities in intermediate inputs trade: a problem in using multilateral trade data," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 37(4), pages 1097-1117, November.
    • Handle: RePEc:wly:canjec:v:37:y:2004:i:4:p:1097-1117
    DOI: 10.1111/j.0008-4085.2004.00262.x
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    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation

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