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Econometric estimation of Armington import elasticities for regional CGE models of the Chicago and Illinois economies

Soo Jung Ha (), Geoffrey Hewings and Karen Turner
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Soo Jung Ha: Department of Economics, University of Strathclyde

No 810, Working Papers from University of Strathclyde Business School, Department of Economics

Abstract: Our current research program is concerned with developing regional and interregional computable general equilibrium models for Chicago and the Midwest respectively. One of the main concerns associated with regional CGE modeling is determination of the empirical parameters of models, particularly elasticities and share parameters. A common problem is the lack of appropriate regional data for econometric estimation. Consequently, it is important to identify key parameters that are likely to be important in determining quantitative results and prioritise these for estimation where appropriate data are available. In this paper we focus on estimating regional trade (import) substitution parameters, both because these will generally be important in analysis for regional economies, which tend to be more open than national economies, and also because one of the main areas of our current research is to model the pollution content of trade flows between regions and the impacts on pollution ‘trade balances’ in response to changes in activity. While our work will eventually encompass the five Midwest states of Illinois, Indiana, Michigan, Ohio and Wisconsin, our first step in the process of parameter estimation for our intended suite of regional and interregional CGE models is to estimate commodity import elasticities for the Illinois economy (to be applied also to our single region Chicago model, in the absence of appropriate data for region-specific estimation at that level). We apply a model where we take account of market size and distance in estimating the substitutability between commodities produced in Illinois and other US states.

Keywords: general equilibrium model; regional modelling; import elasticity (search for similar items in EconPapers)
JEL-codes: C68 F10 R13 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2008-10
New Economics Papers: this item is included in nep-cmp and nep-geo
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Econometric Estimation of Armington import elasticities for regional CGE models of the Chicago and Illinois economies (2008) Downloads
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