Review of export elasticities
Assumptions on export elasticities can have a big impact on CGE model results, especially at the industry level. Export elasticities measure the responsiveness of demand for a country’s exports to a change in the world price. The greater the elasticity, the greater the change in export demand following a price shift. We find that the size of the export elasticities has an important impact on the magnitude of Computable General Equilibrium (CGE) modelling results. We use CGE models to assess the impacts of shocks, such as a major policy change, on measures of welfare like real consumption or GDP. The export elasticity determines the amount of export revenue for a given change in export volumes. The change in revenue flows through the economy and influences measures of welfare like real consumption or GDP. The scale of the elasticities can have a material impact on these results. The results, in turn, influence whether a policy or event is thought to be ‘good’ or ‘bad’ for an economy. Understanding where these elasticities came from, how robust they are, and how they might be re-estimated is therefore important.
|Date of creation:||13 Oct 2011|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.nzier.org.nz/|
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:ris:nzierw:2011_004. 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: (Sarah Spring)
If references are entirely missing, you can add them using this form.