A demand for cuban tobacco exports

Manuel Cantavella-Jordá and Carlos Guerra ()
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Carlos Guerra: Universitat Jaume I, Spain

Journal of Developing Areas, 2013, vol. 47, issue 2, 93-107

Abstract: The objective of this paper is to analyze the external sector on Cuban tobacco from the export demand perspective towards the euro area. A tobacco-specific exchange rate is built to better capture the distinctions of this sector when competing overseas. We apply cointegration in the Fully-Modified Ordinary Least Squares framework and complement an error correction mechanism. It is found that both long and short-run estimates of exchange rate elasticities are significantly inelastic but present, at the same time, a high degree of stability. This means that prices become a fundamental control variable for economic policy purposes. Moreover, there is statistical evidence that income elasticity plays a significant role in the determination of exports growth for Cuban tobacco.

Keywords: export demand; tobacco-specific exchange rate; euro area; elasticities (search for similar items in EconPapers)
JEL-codes: F31 F41 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:jda:journl:vol.47:year:2013:issue2:pp:93-107

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