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Modelling Manufactured Exports: Evidence from Australian States

Author

Listed:
  • David Norman

    (Reserve Bank of Australia)

Abstract

This paper looks at the determinants of national manufactured exports through the use of a panel of Australian states. The panel approach is taken to assess whether the coefficient instability present in direct estimates of export elasticities can be alleviated by utilising the cross-state variation present in both manufactured exports and their determinants. Estimates of the price elasticity using this approach are found to be relatively robust to the use of the mean-group or fixed-effects panel estimation, and to a range of different export demand specifications. Income elasticity estimates are found to be stable across models, but sensitive to the inclusion of other variables. However, the degree of coefficient instability is not found to be significantly less in panel models than when using direct estimates, suggesting that direct estimation remains appropriate. The analysis is then extended to consider the role that domestic factors play in determining manufactured exports. In line with theory, it is found that domestic final demand and capacity utilisation are inversely related to manufactured exports.

Suggested Citation

  • David Norman, 2006. "Modelling Manufactured Exports: Evidence from Australian States," RBA Research Discussion Papers rdp2006-01, Reserve Bank of Australia.
  • Handle: RePEc:rba:rbardp:rdp2006-01
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    References listed on IDEAS

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    More about this item

    Keywords

    manufactured exports; real exchange rates; regional;

    JEL classification:

    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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