Intraperiod and Intertemporal Substitution in Import Demand

Robert Amano, Wai-Ming Ho and Tony Wirjanto ()

No 84, Cahiers de recherche CREFE / CREFE Working Papers from CREFE, Université du Québec à Montréal

Abstract: In this paper, we study intraperiod and intertemporal substitution in U.S. import demand using a two-good version of the permanent-income model that allows for nonseparability between domestic and imported goods consumption. The intratemporal elasticity of substitution between the two goods is estimated to be about 1.09 while the intertemporal elasticity of substitution of the composite good is estimated to be statistically larger than the intraperiod measure and lie between 1.36 to 1.39. We then explore the implications of these estimates for intraperiod and intertemporal substitution in the presence of an exogenous real exchange rate movement.

Dans ce papier, nous étudions la substitution intrapériode et intertemporelle de la demande d'importations des États-Unis en utilisant une version à deux biens du modèle du revenu permanent qui permet de tenir compte de la non-séparabilité entre les biens de consommation domestiques et importés. L'élasticité intratemporelle est estimée à environ 1.09 tandis que l'élasticité de substitution intertemporelle du bien composé est statistiquement plus élevée que la mesure intrapériode et se trouve entre 1.36 et 1.39. Par la suite, nous explorons les implications de ces estimations pour la substitution intrapériode et intertemporelle dans la présence d'un mouvement exogène du taux de change réel.

Keywords: permanent income; nonseparable preferences; cointegration; consumption (search for similar items in EconPapers)
JEL-codes: C22 E21 F10 (search for similar items in EconPapers)
Pages: 22 pages
Date: 1999-08
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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