Estimating Trade Equations from Aggregate Bilateral Data

Author/Editor:

Tamim Bayoumi

Publication Date:

May 1, 1999

Electronic Access:

Free Full Text. Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper uses bilateral data on 420 merchandise trade flows between 21 industrial countries are used to estimate standard trade equations. The data set of over 11,000 observations allows the underlying elasticities to be estimated with considerable precision. Remarkably, a single specification appears to explain behavior across these countries in spite of the large number of individual flows analyzed. The results indicate a powerful long-run effect from supply on exports. Also, the real exchange rate elasticity depends upon the behavior of third country exchange rates. There is evidence of pricing to market and of a J-curve.

Series:

Working Paper No. 99/74

English

Publication Date:

May 1, 1999

ISBN/ISSN:

9781451849578/1018-5941

Stock No:

WPIEA0741999

Price:

$15.00 (Academic Rate:$15.00)

Format:

Paper

Pages:

27

Please address any questions about this title to publications@imf.org