A Discussion on Armington Trade Substitution Elasticities
Christine McDaniel and
Edward Balistreri ()
Computational Economics from EconWPA
Applied partial and general equilibrium models used to examine trade policy are almost universally sensitive to trade elasticities. Indeed, the Armington elasticity, the degree of substitution between domestic and imported goods, is a key behavioral parameter that drives the quantitative, and sometimes the qualitative, results that policymakers use. While standard transparent approaches to econometric estimation of these elasticities have been offered for the last 30 years, the estimates are viewed as too small by many trade economists. A few robust findings emerge from the econometric literature: (1) more disaggregate analyses find higher elasticities, (2) long-run estimates are higher than short-run estimates, and (3) time series analyses generally find lower elasticities relative to cross-sectional studies. We offer simulation results to illustrate the sensitivity of general equilibrium models to Armington elasticites. We conclude with remarks on the current challenges that remain in determining these important parameters.
Keywords: Computable general equilibrium; International Trade; Armington; elasticity (search for similar items in EconPapers)
JEL-codes: F1 C68 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac
Note: Type of Document - PDF; pages: 19; figures: included
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (32) Track citations by RSS feed
Downloads: (external link)
Working Paper: A Discussion on Armington Trade Substitution Elasticities (2002)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpco:0303002
Access Statistics for this paper
More papers in Computational Economics from EconWPA
Bibliographic data for series maintained by EconWPA ().