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Trade Elasticities: A Final Report for the European Commission

Author(s): Jean Imbs, Isabelle Méjean

Trade Elasticities: A Final Report for the European Commissionpdf(394 kB) Choose translations of the previous link 

Summary for non-specialistspdf(79 kB) Choose translations of the previous link 

In a demand system with conventional CES preferences, the price elasticitites of aggregate trade flows are weighted averages of sector-specific elasticities of substitution. We describe a methodology that can be used to estimate country-specific values for the price elasticities of aggregate imports and exports. We first use disaggregated trade data to compute structural estimates of international substitutability for a large cross section of countries. We aggregate up the estimates using model-implied, country-specific weights. We obtain structural estimates of the price elasticities of aggregate exports and imports for more than 30 countries, including most developed and developing economies.

(European Economy. Economic Papers 432. December 2010. Brussels. PDF. 41pp. Tab. Graph. Bibliogr. Free.)

KC-AI-10-432-EN-N (online)
ISBN 978-92-79-14918-4 (online)
ISSN 1725-3195 (online)
doi: 10.2765/46193 (online)

JEL classification: F32, F02, F15, F41

Economic Papers are written by the staff of the Directorate-General for Economic and Financial Affairs, or by experts working in association with them. The Papers are intended to increase awareness of the technical work being done by staff and to seek comments and suggestions for further analysis. The views expressed are the author’s alone and do not necessarily correspond to those of the European Commission.

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