Armington Elasticities in Intermediate Inputs Trade: A Problem in Using Multilateral Trade Data

February 1, 2004

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Format: Chicago

Mika Saito. Armington Elasticities in Intermediate Inputs Trade: A Problem in Using Multilateral Trade Data, (USA: International Monetary Fund, 2004) accessed December 26, 2024

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 finds that the estimates of Armington elasticities (the elasticity of substitution between groups of products identified by country of origin) obtained from multilateral trade data can differ from those obtained from bilateral trade data. In particular, the former tends to be higher than the latter when trade consists largely of intermediate inputs. Given that the variety of intermediate inputs traded across borders is increasing rapidly, and that the effect of this increase is not adequately captured in multilateral trade data, the evidence shows that the use of multilateral trade data to estimate Armington elasticities needs caution.

Subject: Agricultural commodities, Commodities, Economic sectors, Imports, International trade, Manufacturing, Multilateral trade, Plurilateral trade

Keywords: Agricultural commodities, Equipment industry, Food products industry, Global, Goods industry, Gross output, Imports, Industry, Industry Data, Industry-specific volume, Inputs industry, Intermediate Inputs Trade, Manufacturing, Multilateral trade, Panel Data, Plurilateral trade, The Armington Model, Trade data, WP

Publication Details

Pages:

39
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2004/022
Stock No:

WPIEA0222004
ISBN:

9781451921380
ISSN:

1018-5941

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