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Estimating the Trade Elasticity over Time

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  • Hakan Yilmazkuday

    (Department of Economics, Florida International University)

Abstract

Using quarterly data on the U.S. imports from its major trading partners and the corresponding trade costs, this paper estimates the trade elasticity by using a panel structural vector autoregressive model that can distinguish between short-run versus long-run elasticity measures in a continuous way and is robust to any endogeneity problem. The estimated trade elasticity measures are highly consistent with studies in alternative literatures, suggesting a short-run value of about 1 (after one quarter), a medium-run value of about 5 (after one year), and a long-run value of about 7 (after five years).

Suggested Citation

  • Hakan Yilmazkuday, 2019. "Estimating the Trade Elasticity over Time," Working Papers 1903, Florida International University, Department of Economics.
    • Handle: RePEc:fiu:wpaper:1903
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    References listed on IDEAS

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    Cited by:

    1. Christoph E. Boehm & Andrei A. Levchenko & Nitya Pandalai-Nayar, 2020. "The Long and Short (Run) of Trade Elasticities," NBER Working Papers 27064, National Bureau of Economic Research, Inc.
    2. Hakan Yilmazkuday, 2021. "Welfare costs of bilateral currency crises: The role of international trade," International Finance, Wiley Blackwell, vol. 24(1), pages 119-131, April.
    3. Hakan Yilmazkuday, 2021. "Welfare Costs of Travel Reductions within the U.S. due to COVID-19," Working Papers 2114, Florida International University, Department of Economics.

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    More about this item

    Keywords

    Trade Elasticity; Short-run; Medium-run; Long-run;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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