A review of Armington trade substitution elasticities

2003 ◽  
Vol n° 94-95 (2) ◽  
pp. 301-313
Author(s):  
Christine A. Mc Daniel ◽  
Edward J. Balistreri
Keyword(s):  
Substitution Elasticities

International reserves: self-insurance and monetary policy in crisis

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Antonio Francisco de Almeida da Silva Junior
Keyword(s):  
Monetary Policy ◽  
Utility Function ◽  
International Reserves ◽  
Constant Elasticity ◽  
Content Type ◽  
Constant Elasticity Of Substitution ◽  
States Of Nature ◽  
Substitution Elasticities ◽  
Ces Utility Function ◽  
The Impact

PurposeThis work presents a model of a two-period economy to discuss the link between the precautionary motivation for holding international reserves and the country's monetary policy concerns due to a crisis.Design/methodology/approachThere are two possible states of nature in the second period of the economy: a normal state and a crisis state. These states of nature represent uncertainty to the policy maker and he can insure against a crisis. The household has a constant-elasticity-of-substitution (CES) utility function, where utility depends on consumption and money.FindingsBy allowing money in the utility function and in the household financial constraint and considering that the objective of the central bank is to smooth inflation, it is concluded that monetary policy plays a role in the precautionary motivation of holding international reserves.Practical implicationsThe model can be used to calculate optimal reserves holdings in its complete or even in its simplified version. Furthermore, it is possible to evaluate the impact of the intra-temporal substitution elasticity between consumption and real money in the decision of accumulating international reserves.Originality/valueHigher intra-temporal substitution elasticities implies in more insurance via international reserves, and this discussion is not found in the existent literature on international reserves.

scholarly journals The Energy Demand in the Industrial Sector of Pakistan

1991 ◽  
Vol 30 (1) ◽  
pp. 83-88 ◽  
Author(s):  
Salim Chishti ◽  
Fakhre Mahmood
Keyword(s):  
Energy Demand ◽  
Industrial Sector ◽  
Partial Substitution ◽  
Energy Prices ◽  
Price Elasticities ◽  
Inelastic Demand ◽  
Separate Factor ◽  
Demand Equations ◽  
The Cost ◽  
Substitution Elasticities

The purpose of this study is to analyse the role of energy in the manufaCblring sector of Pakistan. The translog cost function alongwith the input demand equations corresponding to enel'kY, capital, and labour have been estimated, using Zellner's iterative procedure. Time trend has been included in the cost equation in view of the low Durbin-Watson statistics. The results justify the inclusion of energy as a separate factor of production. Price elasticities and Allen-Uzawa partial substitution elasticities have been estimated. Own price elasticities indicate a rather inelastic demand fOl" inputs. Cross-price elasticities show that energy and labour, and capital and labour are substitutes. The partial substitution elasticities between enellY and capital are negative; which implies that higher energy prices will adversely affect investment in capital goods. On the other hand, the positive substitution elasticity between energy and employment implies that higher energy prices would induce more labour absorption.

scholarly journals The Trade Impact of EU Tariff Margins: An Empirical Assessment

2019 ◽  
Vol 8 (9) ◽  
pp. 261
Author(s):  
Maria Cipollina ◽  
Luca Salvatici
Keyword(s):  
Trade Flows ◽  
Trade Policies ◽  
Most Favored Nation ◽  
Section Data ◽  
Domestic Trade ◽  
Depth Analysis ◽  
Sufficient Variation ◽  
Trade Preferences ◽  
Substitution Elasticities ◽  
The Eu

This article provides an assessment of how the EU trade policies affect EU imports. The main contribution is that we compute a theoretically consistent measure of the EU tariff margin and estimate the elasticities of substitution at the sectoral level, using a structural gravity model that includes domestic trade flows. Our analysis is related to the most recent gravity literature and the identification strategy is based on the existence of a sufficient variation of the tariffs applied by the EU to different markets of origin. We use cross-section data (more than 5000 tariff lines and 188 exporters, including the EU28 Member States, in the year 2017), to obtain structural gravity estimates of trade substitution elasticities. Since tariffs greatly differ by product, an in-depth analysis should take place at the tariff line. Moreover, we use the information provided by the Eurostat Comext database on the tariff regime of imports, so we distinguish the Most Favored Nation (MFN) from the preferential trade flows. The estimated elasticities can be used to calculate the counterfactual change in total EU imports that would follow either from the removal of trade preferences or from the removal of trade policies.

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