Armington Elasticities for Brazil - 1986-2002: New Estimates
IPEA Discussion Paper No. 974
22 Pages Posted: 24 Apr 2003
Date Written: September 2003
Abstract
The structure introduced by Armington (1969) has been used to analyze trade policy in partial and general equilibrium models. The Armington elasticities, the degree of substitution between domestic and import goods are known to be important, but are seldom estimated empirically. Therefore, we estimate them for 28 industrial sectors, based on the Brazilian Input-Output table over the period 1986-2000. Initially we discuss the construction of the data set and the treatment that was given to the relative prices, for taking into account the trade liberalization initiated in 1990. According to the dynamic properties of the data we estimate four different econometric models. 25 out of the 28 sectors had positive and significant Armington estimates that were significant at the ten-percent level. They range between 0,16 e 4,95, which reflects the different degree of substitutability between domestic and import goods in the Brazilian industry.
Note: Previously Entitled: Armington Elasticities for Brazil: 1986-2001
Keywords: Substitution elasticity, Armington model, Imports Trade
JEL Classification: F1
Suggested Citation: Suggested Citation