Import Price Uncertainty and the Distribution of Income
In this paper we estimate oil and nonoil import demand functions for the United States under the assumption that import prices are uncertain. Both import demand functions are formally derived from an expected utility maximization problem, treating imports as inputs to the technology. The model allows us to test for risk aversion and to assess the impact of uncertainty on the volume of imports, gross output, and the distribution of income. We find that uncertainty leads to a reduction in welfare, imports, and gross output. Moreover, it hurts labor relatively much more than capital. The impact of uncertainty, however, is found to be quite small.
|Date of creation:||Nov 1996|
|Date of revision:|
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- Elie Appelbaum, 1996. "An Application of Duality under Uncertainty, Elie Appelbaum," Working Papers 1996_8, York University, Department of Economics.
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244, University of Oxford, Department of Economics.
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- Elie Appelbaum & Ulrich Kohli, 1997.
"Import-Price Uncertainty, Production Decisions, and Relative Factor Shares,"
1997_4, York University, Department of Economics.
- Appelbaum, Elie & Kohli, Ulrich, 1998. "Import-Price Uncertainty, Production Decisions, and Relative Factor Shares," Review of International Economics, Wiley Blackwell, vol. 6(3), pages 345-60, August.
- David S. Bullock & Philip Garcia & Kie-Yup Shin, 2005. "Measuring producer welfare under output price uncertainty and risk non-neutrality," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 49(1), pages 1-21, 03.
- Andrew Muhammad, 2012. "Source Diversification and Import Price Risk," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(3), pages 801-814.
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