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Import Demand Elasticities and Trade Distortions

Hiau Looi Kee; Alessandro Nicita; Marcelo Olarreaga

World Bank Group

The Review of Economics and Statistics 2008 open access

This paper provides a systematic estimation of import demand elasticities for a broad group of countries at a very disaggregated level of product detail. We use a semiflexible translog GDP function approach to formally derive import demands and their elasticities, which are estimated with data on prices and endowments. Within a theoretically consistent framework, we use the estimated elasticities to construct Feenstra's (1995) simplification of Anderson and Neary's trade restrictiveness index (TRI). The difference between TRIs and import-weighted tariffs is shown to depend on the tariff variance and the covariance between tariffs and import demand elasticities.

DOI
10.1162/rest.90.4.666
Volume
90 (4)
Pages
666-682
Language
en
Export
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