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Trade Elasticities: A Final Report for the European Commission

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  • Jean Imbs
  • Isabelle Mejean

Abstract

In a demand system with conventional CES preferences, the price elasticitites of aggregate trade flows are weighted averages of sector-specific elasticities of substitution. We describe a methodology that can be used to estimate country-specific values for the price elasticities of aggregate imports and exports. We first use disaggregated trade data to compute structural estimates of international substitutability for a large cross section of countries. We aggregate up the estimates using model-implied, country-specific weights. We obtain structural estimates of the price elasticities of aggregate exports and imports for more than 30 countries, including most developed and developing economies.

Suggested Citation

  • Jean Imbs & Isabelle Mejean, 2010. "Trade Elasticities: A Final Report for the European Commission," European Economy - Economic Papers 2008 - 2015 432, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
  • Handle: RePEc:euf:ecopap:0432
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    Cited by:

    1. Angelini, E. & Dieppe, A. & Pierluigi, B., 2015. "Modelling internal devaluation experiences in Europe: Rational or learning agents?," Journal of Macroeconomics, Elsevier, vol. 43(C), pages 81-92.
    2. repec:eee:inecon:v:108:y:2017:i:c:p:54-66 is not listed on IDEAS
    3. Lukas Vogel & Werner Roeger & Bernhard Herz, 2013. "The Performance of Simple Fiscal Policy Rules in Monetary Union," Open Economies Review, Springer, vol. 24(1), pages 165-196, February.
    4. Hohberger, Stefan & Kraus, Lena, 2016. "Is fiscal devaluation welfare enhancing?," Economic Modelling, Elsevier, vol. 58(C), pages 512-522.
    5. Gomes, S. & Jacquinot, P. & Pisani, M., 2016. "Fiscal devaluation in the euro area: A model-based analysis," Economic Modelling, Elsevier, vol. 52(PA), pages 58-70.
    6. Augusto de la Torre & Eduardo Levy Yeyati & Samuel Pienknagura, "undated". "Latin America’s Deceleration and the Exchange Rate Buffer : LAC Semiannual Report, October 2013," World Bank Other Operational Studies 16107, The World Bank.
    7. Lukas Vogel, 2017. "Stabilization and Rebalancing with Fiscal or Monetary Devaluation: a Model-Based Comparison," CESifo Economic Studies, CESifo, vol. 63(2), pages 235-253.
    8. Oliver Holtemöller & Götz Zeddies, 2013. "Has the Euro increased international price elasticities?," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 40(1), pages 197-214, February.
    9. repec:eee:inteco:v:151:y:2017:i:c:p:85-99 is not listed on IDEAS
    10. Pierre-Richard Agénor & K. Alper & L. Pereira da Silva, 2015. "External Shocks, Financial Volatility and Reserve Requirements in an Open Economy," Working Papers Series 396, Central Bank of Brazil, Research Department.
    11. Agénor, Pierre-Richard & Alper, Koray & Pereira da Silva, Luiz A., 2014. "Sudden floods, macroprudential regulation and stability in an open economy," Journal of International Money and Finance, Elsevier, vol. 48(PA), pages 68-100.
    12. Clément Carbonnier & Gwenaële Rot & Clément Malgouyres, 2016. "Evaluation interdisciplinaire des impacts du CICE en matière de compétitivité internationale, d'investissement, d'emploi, de résultat net des entreprises et de salaires," Sciences Po publications info:hdl:2441/4v8c8tnfgu8, Sciences Po.
    13. Algieri, Bernardina, 2015. "An Analysis of Regional Export Patterns: The Case of Calabria in Southern Italy - Un’analisi dei modelli di esportazione regionale: il caso della Calabria," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 68(3), pages 297-322.
    14. Erdal Ozmen & Duygu Yolcu-Karadam, 2014. "Structural Change in Turkish External Trade: Evidence from BEC Sectors," ERC Working Papers 1413, ERC - Economic Research Center, Middle East Technical University, revised Nov 2014.
    15. Natalya Ketenci, 2016. "The bilateral trade flows of the EU in the presence of structural breaks," Empirical Economics, Springer, pages 1369-1398.
    16. C. Durand. & C. Lopez., 2012. "Equilibrium exchange rate and competitiveness within the euro area," Quarterly selection of articles - Bulletin de la Banque de France, Banque de France, pages 87-100.
    17. Kurtovic, Safet & Halili, Blerim & Maxhuni, Nehat, 2016. "Bilateral Trade Elasticity: B&H versus its seven trade partners," MPRA Paper 72297, University Library of Munich, Germany.
    18. repec:psl:pslqrr:2017:24 is not listed on IDEAS

    More about this item

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F15 - International Economics - - Trade - - - Economic Integration
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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