Estimating Trade Equations from Aggregate Bilateral Data

May 1, 1999

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Format: Chicago

Tamim Bayoumi. Estimating Trade Equations from Aggregate Bilateral Data, (USA: International Monetary Fund, 1999) accessed November 24, 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 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.

Subject: Exchange rates, Export prices, Exports, Real exchange rates, Trade balance

Keywords: WP

Publication Details

Pages:

27
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1999/074
Stock No:

WPIEA0741999
ISBN:

9781451849578
ISSN:

1018-5941

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