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Expansion of Mercosur's Agricultural Exports to the EU: An Empirical Assessment of the Trade Flows

Author

Listed:
  • Niemi, Jyrki S.
  • Huan-Niemi, Ellen
  • Ledebur, Oliver von
  • Salamon, Petra

Abstract

This paper provides new evidence on income and price elasticities of demand for agricultural exports from Mercosur countries to the EU. Econometric models are constructed for eight agricultural commodities - beef, cocoa, coffee, orange juice, poultry, sugar, soya and wheat - exported from Mercosur to the EU. A modelling approach based on the error correction mechanism is used in order to emphasise the importance of the dynamics of trade functions. The results indicate that there is a relatively weak demand response to income and price changes in the EU. However, the results also suggest that relative-price variations affect significantly the demand for Mercosur commodity exports, implying that the exporter's market share is influenced by price competitiveness.

Suggested Citation

  • Niemi, Jyrki S. & Huan-Niemi, Ellen & Ledebur, Oliver von & Salamon, Petra, 2005. "Expansion of Mercosur's Agricultural Exports to the EU: An Empirical Assessment of the Trade Flows," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24606, European Association of Agricultural Economists.
  • Handle: RePEc:ags:eaae05:24606
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    References listed on IDEAS

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    1. Hendry, David F, 1986. "Econometric Modelling with Cointegrated Variables: An Overview," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 48(3), pages 201-212, August.
    2. Banerjee, Anindya & Dolado, Juan J. & Galbraith, John W. & Hendry, David, 1993. "Co-integration, Error Correction, and the Econometric Analysis of Non-Stationary Data," OUP Catalogue, Oxford University Press, number 9780198288107.
    3. Perron, Pierre, 1988. "Trends and random walks in macroeconomic time series : Further evidence from a new approach," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 297-332.
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    5. Davidson, James E H, et al, 1978. "Econometric Modelling of the Aggregate Time-Series Relationship between Consumers' Expenditure and Income in the United Kingdom," Economic Journal, Royal Economic Society, vol. 88(352), pages 661-692, December.
    6. Phillips, Peter C B & Ouliaris, S, 1990. "Asymptotic Properties of Residual Based Tests for Cointegration," Econometrica, Econometric Society, vol. 58(1), pages 165-193, January.
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    8. Scobie, Grant M. & Johnson, Paul R., 1975. "Estimation of the elasticity of substitution in the presence of errors of measurement," Journal of Econometrics, Elsevier, vol. 3(1), pages 51-56, February.
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    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    agricultural trade; European Union; Mercosur; econometric models; cointegration; International Relations/Trade; C22; Q17;

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade

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