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Import‐Price Uncertainty, Production Decisions, and Relative Factor Shares
Author(s) -
Appelbaum Elie,
Kohli Ulrich
Publication year - 1998
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/1467-9396.00108
Subject(s) - economics , production (economics) , factor shares , maximization , induced innovation , relative price , capital (architecture) , factor price , econometrics , production function , microeconomics , function (biology) , utility maximization , risk aversion (psychology) , expected utility hypothesis , financial economics , macroeconomics , technological change , mathematical economics , history , archaeology , evolutionary biology , biology
The effects of import‐price uncertainty on factor income in Switzerland are estimated. The production‐theory approach is used to derive the import demand function from an expected utility maximization problem, treating imports as an input to the technology. The model is also used to test for risk aversion and to assess the impact of uncertainty on the volume of imports and gross output. Evidence is found that, for most years, labor has been relatively more vulnerable to uncertainty than has capital.