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How Elastic is East Asian Demand for Consumption Goods?

Author

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  • Willem Thorbecke

    (Asian Development Bank Institute)

Abstract

This paper investigates import demand in East Asia. Estimating exchange rate elasticities for countries in the region is difficult because many imports are used to produce goods for re-export. An exchange rate appreciation that reduces East Asian exports will also reduce the demand for imported inputs that are used to produce exports. To correct for this bias this paper examines the imports of consumption goods, since these are intended primarily for the domestic market. Results from several specifications indicate that currency appreciations and increases in income in East Asian countries would significantly increase consumption imports.

Suggested Citation

  • Willem Thorbecke, 2010. "How Elastic is East Asian Demand for Consumption Goods?," ADBI Working Papers 260, Asian Development Bank Institute.
    • Handle: RePEc:ris:adbiwp:0260
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    References listed on IDEAS

    as
    1. Yin-Wong Cheung & Menzie D. Chinn & Eiji Fujii, 2010. "China's Current Account and Exchange Rate," NBER Chapters, in: China's Growing Role in World Trade, pages 231-271, National Bureau of Economic Research, Inc.
    2. Garcia-Herrero, Alicia & Koivu, Tuuli, 2007. "Can the chinese trade surplus be reduced through exchange rate policy?," BOFIT Discussion Papers 6/2007, Bank of Finland, Institute for Economies in Transition.
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    Cited by:

    1. Willem THORBECKE, 2016. "China's Electronics Exports, the Renminbi, and Exchange Rates in Supply Chain Countries," Discussion papers 16088, Research Institute of Economy, Trade and Industry (RIETI).
    2. Willem Thorbecke, 2011. "The Effect Of Exchange Rate Changes On Trade In East Asia," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 2(01), pages 85-102.
    3. Willem Thorbecke, 2015. "Enjoying the Fruits of Their Labor: Redirecting Exports to Asian Consumers," Asian Development Review, MIT Press, vol. 32(2), pages 95-114, September.
    4. Thorbecke, Willem, 2016. "Understanding Chinese consumption goods imports," Journal of Policy Modeling, Elsevier, vol. 38(1), pages 96-102.
    5. Thorbecke, Willem, 2019. "East Asian value chains, exchange rates, and regional exchange rate arrangements," Journal of Asian Economics, Elsevier, vol. 65(C).
    6. Willem Thorbecke, 2011. "Transpacific Imbalances and Macroeconomic Codependency," Governance Working Papers 23237, East Asian Bureau of Economic Research.

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    Keywords

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    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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