Trade liberalization and the allocation over domestic and foreign supplies: a case study for Spanish manufacturing

Paul de Boer, C. Martinez and R. Harkema

No EI 9829, Econometric Institute Research Papers from Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute

Abstract: The purpose of the present paper is to investigate whether Spain's accession to the European Union in 1986 caused a structural break in the allocation of total supplies of manufactures over domestic and foreign supplies. To that end we use the homogeneity-constrained Almost Ideal Demand System to specify the long-run equilibrium relationships between the shares in total supplies and total real demand and relative prices and a first-order error correction mechanism in order to describe the adjustment process to equilibrium. Using a formal statistical test, it turns out that a structural break actually occurred and led to a rather sharp decrease in the share of Spain and an increase in the shares of the other members of the European Union.

Keywords: economic integration; impact assessment; structural break (search for similar items in EconPapers)
Date: 1998-08-13
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