THE CHALLENGING ESTIMATION OF TRADE ELASTICITIES:TACKLING THE INCONCLUSIVE EUROZONE EVIDENCE

Sascha Keil ()
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Sascha Keil: Technische Universitaet Chemnitz, Fakultaet für Wirtschaftswissenschaften, Professur für Wirtschaftspolitik, Sascha Keil, 09107 Chemnitz (Germany)

No 42, Chemnitz Economic Papers from Department of Economics, Chemnitz University of Technology

Abstract: This paper sheds light on serious methodological difficulties of employing the empiric export equation in order to derive long-run trade elasticities. The unreliable estimated price coefficient (Kaldor Paradox) and the potential presence of cointegrationare identified as the most relevant points. It can be shown that difficulties are in part due to methodological issues. New empirical evidence, encompassing eleven Euro area countries and the timespan 1995–2019, has been obtained from different cointegration techniques. In seven out of eleven cases a robust long-run relationship can be detected and price elasticity was consistently found being significant and negative.

Keywords: International trade; Competitiveness; Kaldor Paradox; Export equation; ARDL (search for similar items in EconPapers)
JEL-codes: F14 C13 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2021-05, Revised 2021-05
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Published in Chemnitz Economic Papers, May 2021, pages 1-32

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Persistent link: https://EconPapers.repec.org/RePEc:tch:wpaper:cep042

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