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Econometric Estimation of Armington import elasticities for regional CGE models of the Chicago and Illinois economies

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  • Ha, Soo Junga
  • Turner, Karen
  • Hewings, Geoffrey

Abstract

Our current research program is concerned with developing regional and interregional computable general equilibrium models for Chicago and the Midwest respectively. One of the main concerns associated with regional CGE modeling is determination of the empirical parameters of models, particularly elasticities and share parameters. A common problem is the lack of appropriate regional data for econometric estimation. Consequently, it is important to identify key parameters that are likely to be important in determining quantitative results and prioritise these for estimation where appropriate data are available. In this paper we focus on estimating regional trade (import) substitution parameters, both because these will generally be important in analysis for regional economies, which tend to be more open than national economies, and also because one of the main areas of our current research is to model the pollution content of trade flows between regions and the impacts on pollution ‘trade balances’ in response to changes in activity. While our work will eventually encompass the five Midwest states of Illinois, Indiana, Michigan, Ohio and Wisconsin, our first step in the process of parameter estimation for our intended suite of regional and interregional CGE models is to estimate commodity import elasticities for the Illinois economy (to be applied also to our single region Chicago model, in the absence of appropriate data for region-specific estimation at that level). We apply a model where we take account of market size and distance in estimating the substitutability between commodities produced in Illinois and other US states.
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Suggested Citation

  • Ha, Soo Junga & Turner, Karen & Hewings, Geoffrey, 2008. "Econometric Estimation of Armington import elasticities for regional CGE models of the Chicago and Illinois economies," SIRE Discussion Papers 2008-37, Scottish Institute for Research in Economics (SIRE).
  • Handle: RePEc:edn:sirdps:50
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    File URL: http://hdl.handle.net/10943/50
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    References listed on IDEAS

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    1. Linda Ferguson & David Learmonth & Peter G McGregor & J Kim Swales & Karen Turner, 2007. "The Impact of the Barnett Formula on the Scottish Economy: Endogenous Population and Variable Formula Proportions," Environment and Planning A, , vol. 39(12), pages 3008-3027, December.
    2. Domingues, Edson P. & Haddad, Eduardo A. & Hewings, Geoffrey, 2008. "Sensitivity analysis in applied general equilibrium models: An empirical assessment for MERCOSUR free trade areas agreements," The Quarterly Review of Economics and Finance, Elsevier, vol. 48(2), pages 287-306, May.
    3. Turner, Karen, 2008. "A computable general equilibrium analysis of the relative price sensitivity required to induce rebound effects in response to an improvement in energy efficiency in the UK economy," SIRE Discussion Papers 2008-20, Scottish Institute for Research in Economics (SIRE).
    4. Hélène Erkel-Rousse & Daniel Mirza, 2002. "Import price elasticities: reconsidering the evidence," Canadian Journal of Economics, Canadian Economics Association, vol. 35(2), pages 282-306, May.
    5. Reinert, Kenneth A. & Roland-Holst, David W., 1992. "Armington elasticities for United States manufacturing sectors," Journal of Policy Modeling, Elsevier, vol. 14(5), pages 631-639, October.
    6. Stephen P. King, 2000. "Introduction," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 33(1), pages 65-66.
    7. Hanley, Nick & McGregor, Peter G. & Swales, J. Kim & Turner, Karen, 2009. "Do increases in energy efficiency improve environmental quality and sustainability?," Ecological Economics, Elsevier, vol. 68(3), pages 692-709, January.
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    Cited by:

    1. Morgenstern, Richard & Moore, Eric, 2011. "California Industry Impacts of a Statewide Carbon Pricing Policy with Output-Based Rebates," Discussion Papers dp-11-05, Resources For the Future.

    More about this item

    Keywords

    equilibrium model; computable general; regional modelling; import elasticity;

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • F10 - International Economics - - Trade - - - General

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