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Review of export elasticities

Author

Listed:
  • Ballingall, John

    (New Zealand Institute of Economic Research)

  • Allen, James

    (New Zealand Institute of Economic Research)

Abstract

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.

Suggested Citation

  • Ballingall, John & Allen, James, 2011. "Review of export elasticities," NZIER Working Paper 2011/4, New Zealand Institute of Economic Research.
  • Handle: RePEc:ris:nzierw:2011_004
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    File URL: http://nzier.org.nz/publication/review-of-export-elasticities-nzier-working-paper-20114
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    References listed on IDEAS

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    5. D. W. Jorgenson & Z. Griliches, 1967. "The Explanation of Productivity Change," Review of Economic Studies, Oxford University Press, vol. 34(3), pages 249-283.
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    Cited by:

    1. International Monetary Fund, 2012. "Philippines; Technical Assistance Report on Road Map for a Pro-Growth and Equitable Tax System," IMF Staff Country Reports 12/60, International Monetary Fund.
    2. Anita King, 2012. "Economy-Wide Impacts of Industry Policy," Treasury Working Paper Series 12/05, New Zealand Treasury.

    More about this item

    Keywords

    CGE modelling and analysis; export elasticities; New Zealand;

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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