Estimating price elasticities of food trade functions: How relevant is the gravity approach?

The main objective of the paper is related to the long standing issue of the econometric estimation of price elasticity of food trade functions. We investigate the relevance of the prominent gravity approach. This approach is based on the assumptions of symmetric, monotone, homothetic, CES preferences. We test all these assumptions using European intra trade of cheese. In a general way, all assumptions made on preferences by the gravity approach are not supported by our data set. The bias induced on the estimated price elasticities is not univocal.


Issue Date:
2007
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/7211
Total Pages:
37
Series Statement:
TRADEAG Working Papers
14/2007




 Record created 2017-04-01, last modified 2017-08-23

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