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Armington Elasticities in Intermediate Inputs Trade: A Problem in Using Multilateral Trade Data
Author:
Mika Saito null

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Series:
IMF Working Papers
Volume/Issue:
Volume 2004: Issue 022
Language:
English
Publication Date:
01 Feb 2004
DOI:
https://doi.org/10.5089/9781451921380.001
ISBN:
9781451921380
ISSN:
1018-5941
Pages:
39
Keywords:
WP; industry; goods industry; The Armington Model; Intermediate Inputs Trade; Panel Data; trade data; industry Data; food products industry; industry-specific volume; equipment industry; inputs industry; gross output; Manufacturing; Agricultural commodities; Multilateral trade; Plurilateral trade; Imports; Global
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund