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LIML Estimation of Import Demand and Export Supply Elasticities

Vahagn Galstyan

Economic Papers from Trinity College Dublin, Economics Department

Abstract: Following the seminal contribution of Feenstra (1994), I apply limited-information maximum likelihood to estimate import demand and export supply elasticities for a range of eurozone countries. The results highlight substantial inconsistencies in the parameters estimated by the methodology of Fuller (1977) relative to the parameters estimated by the methodology of Hausman et al (2012). The nature of the structural equations reveals complications generated by the limiting behavior of the parameters that can be replicated in finite samples. The results of simulations underscore substantial improvements in parameter estimates in a three-dimensional panel, suggesting that the problem of limiting behaviour can be overcome in larger dataset/panels.

Keywords: LIML; elasticity (search for similar items in EconPapers)
JEL-codes: F14 C13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int
Date: 2016-03, Revised 2016-06
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Journal Article: LIML estimation of import demand and export supply elasticities (2018) Downloads
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