IDEAS home Printed from https://ideas.repec.org/p/fip/fedgif/396.html
   My bibliography  Save this paper

The econometrics of elasticities or the elasticity of econometrics: an empirical analysis of the behavior of U.S. imports

Author

Listed:
  • Jaime R. Marquez

Abstract

Fifty years of econometric modeling of U.S. import demand assumes that trade elasticities are autonomous parameters, that both cross-price effects and simultaneity biases are absent, and that expenditures on domestic and foreign goods can be studied independently of each other. To relax these assumptions, the paper assembles a simultaneous model explaining bilateral U.S. import volumes and prices. Spending behaves according to the Rotterdam model which, by design, embodies all of the properties of utility maximization and does not treat trade elasticities as autonomous parameters. Pricing behaves according to the pricing-to-market hypothesis which recognizes exporters' incentives to discriminate across export markets. Parameter estimation relies on the Full Information Maximum Likelihood (FIML) approach and uses bilateral price data for 1965-1987. According to the evidence, treating trade elasticities as autonomous parameters and ignoring the statistical implications of simultaneity and optimization impart significant biases to the structural estimates and undermine our effectiveness in addressing questions relevant to economic interactions among nations.

Suggested Citation

  • Jaime R. Marquez, 1991. "The econometrics of elasticities or the elasticity of econometrics: an empirical analysis of the behavior of U.S. imports," International Finance Discussion Papers 396, Board of Governors of the Federal Reserve System (U.S.), revised 1991.
  • Handle: RePEc:fip:fedgif:396
    as

    Download full text from publisher

    File URL: http://www.federalreserve.gov/pubs/ifdp/1991/396/ifdp396.pdf
    Download Restriction: no

    File URL: http://www.federalreserve.gov/pubs/ifdp/1991/396/default.htm
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Feenstra, Robert C. & Gagnon, Joseph E. & Knetter, Michael M., 1996. "Market share and exchange rate pass-through in world automobile trade," Journal of International Economics, Elsevier, vol. 40(1-2), pages 187-207, February.
    2. Idrisova, Vittoria (Идрисова, Виттория), 2017. "Determinants of Value-Added Exports: The Role of Import Demand Factors [Детерминанты Экспорта Добавленной Стоимости: Роль Факторов Спроса На Импорт]," Working Papers 051715, Russian Presidential Academy of National Economy and Public Administration.
    3. Olivier Cortès & Sébastien Jean, 1996. "Pays émergents, emploi déficient ?," Working Papers 1996-05, CEPII research center.

    More about this item

    Keywords

    Imports; Econometrics;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedgif:396. 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: (). General contact details of provider: http://edirc.repec.org/data/frbgvus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.