Global production sharing and the measurement of price elasticity in international trade

Prema-chandra Athukorala and Fahad Khan

Economics Letters, 2016, vol. 139, issue C, 27-30

Abstract: The implications of global production sharing for the measurement of price elasticity in international trade is examined using a unique dataset relating to manufacturing imports of the USA. There is strong evidence that parts and components, which account for a growing share of manufacturing trade, are remarkably less sensitive to changes in relative prices compared to final goods. This finding casts doubt on the conventional approach to trade flow modelling that treats parts and components and finals goods as a unified product.

Keywords: Trade elasticity; Global production sharing; Dynamic fixed effects estimator (search for similar items in EconPapers)
JEL-codes: F10 F23 F4 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:139:y:2016:i:c:p:27-30

DOI: 10.1016/j.econlet.2015.09.038

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