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The Challenging Estimation Of Trade Elasticities:Tackling The Inconclusive Eurozone Evidence

Author

Listed:
  • Sascha Keil

    (Technische Universitaet Chemnitz, Fakultaet für Wirtschaftswissenschaften, Professur für Wirtschaftspolitik, Sascha Keil, 09107 Chemnitz (Germany))

Abstract

This paper sheds light on serious methodological difficulties of employing the empiric export equation in order to derive long-run trade elasticities. The unreliable estimated price coefficient (Kaldor Paradox) and the potential presence of cointegrationare identified as the most relevant points. It can be shown that difficulties are in part due to methodological issues. New empirical evidence, encompassing eleven Euro area countries and the timespan 1995–2019, has been obtained from different cointegration techniques. In seven out of eleven cases a robust long-run relationship can be detected and price elasticity was consistently found being significant and negative.

Suggested Citation

  • Sascha Keil, 2021. "The Challenging Estimation Of Trade Elasticities:Tackling The Inconclusive Eurozone Evidence," Chemnitz Economic Papers 042, Department of Economics, Chemnitz University of Technology, revised May 2021.
    • Handle: RePEc:tch:wpaper:cep042
    as

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    References listed on IDEAS

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    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General

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