Trade adjustment in the European Union - a structural estimation approach
We estimate the elasticity of substitution of a country’s imports, and that of its exports on the world market, for EU countries using sector level trade data. We present a new empirical strategy based on the identification scheme by Feenstra (1994), which enables the estimation of elasticities from data on exports. Moreover, our use of bootstrap methods allows us to obtain better elasticity measures, and to better characterize their accuracy. Our results show much heterogeneity in the estimates of the elasticity of substitution across industrial sectors. This, in turn, points to heterogeneity across countries, due to different production and trade structures. We obtain aggregate elasticities for the EU27 countries, with a mean of 3.5 for imports and 4.0 for exports, bringing us closer to traditional estimates and bridging the gap between the newer micro data estimates and the more traditional estimates found in the macroeconomic literature. JEL Classification: C23, F14, F47
|Date of creation:||Apr 2013|
|Date of revision:|
|Contact details of provider:|| Postal: 60640 Frankfurt am Main, Germany|
Phone: +49 69 1344 0
Fax: +49 69 1344 6000
Web page: http://www.ecb.europa.eu/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Feenstra & R.C., 1990.
"New Goods and Index Members: U.S. Import Prices,"
371, California Davis - Institute of Governmental Affairs.
- Jean Imbs & Isabelle Mejean, 2008.
EIEF Working Papers Series
0805, Einaudi Institute for Economics and Finance (EIEF), revised Mar 2008.
- Jean Imbs & Isabelle Méjean, 2009. "Elasticity optimism," Working Papers hal-00362403, HAL.
- International Monetary Fund, 2009. "Elasticity Optimism," IMF Working Papers 09/279, International Monetary Fund.
- Jean Imbs & Isabelle Mˆmjean, 2008. "Elasticity Optimism," Working Papers 242008, Hong Kong Institute for Monetary Research.
- Imbs, Jean & Mejean, Isabelle, 2009. "Elasticity Optimism," CEPR Discussion Papers 7177, C.E.P.R. Discussion Papers.
- Jean Imbs & Isabelle Mejean, 2015. "Elasticity Optimism," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01301577, HAL.
- Justin Pierce & Peter Schott, 2009.
"Concording U.S. Harmonized System Categories Over Time,"
09-11, Center for Economic Studies, U.S. Census Bureau.
- Justin R. Pierce & Peter K. Schott, 2012. "Concording U.S. Harmonized System categories over time," Finance and Economics Discussion Series 2012-16, Board of Governors of the Federal Reserve System (U.S.).
- Justin R. Pierce & Peter K. Schott, 2009. "Concording U.S. Harmonized System Categories Over Time," NBER Working Papers 14837, National Bureau of Economic Research, Inc.
- Mohler, Lukas & Seitz, Michael, 2010.
"The Gains from Variety in the European Union,"
Discussion Papers in Economics
11477, University of Munich, Department of Economics.
- Lukas Mohler & Michael Seitz, 2012. "The gains from variety in the European Union," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 148(3), pages 475-500, September.
When requesting a correction, please mention this item's handle: RePEc:ecb:ecbwps:20131535. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Official Publications)
If references are entirely missing, you can add them using this form.