Template-Type: ReDIF-Paper 1.0
Author-Name: A Duarte
Author-Name-First: A
Author-Name-Last: Duarte
Author-Name: J L Nicolini-Llosa
Author-Name-First: J L
Author-Name-Last: Nicolini-Llosa
Author-Name: I Paya
Author-Name-First: I
Author-Name-Last: Paya
Title: Estimating Argentina''s imports elasticities
Abstract: The aim of this paper is to provide new estimates of the income and price elasticities of the demand for imports in Argentina. Given the non-stationary nature of the data and to avoid problems of spurious regression we applied co-integration techniques to quarterly data over the period 1970:1 -2005:4. Three results are worth mentioning. First, there is a statistically significant and stable long-run relationship between the level of imports, real income and the exchange rate. Second, in the long run, a very high-income elasticity and a low real exchange rate elasticity determine the demand for imports. This result confirms an old argument concerning Argentina's constraint to economic growth as originally developed by the well-known structural approach. Third, while the linear error correction models show problems of misspecification, a non-linear STAR model demonstrates that deviations from long-run equilibrium adjust not only in a non-linear way but also at a slower speed of adjustment than the linear one.
Creation-Date: 2007
File-URL: http://www.lancaster.ac.uk/media/lancaster-university/content-assets/documents/lums/economics/working-papers/ArgentinaElasticities.pdf
File-Format: application/pdf
Number: 583372
Classification-JEL: 
Keywords: Argentina, Foreign trade elasticities, Cointegration, Non-linear adjustment
Handle: RePEc:lan:wpaper:583372