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How Elastic is East Asian Demand for Consumption Goods?
Author(s) -
Thorbecke Willem
Publication year - 2011
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/j.1467-9396.2011.00997.x
Subject(s) - economics , east asia , consumption (sociology) , currency , exchange rate , international economics , international trade , monetary economics , china , geography , social science , archaeology , sociology
This paper investigates import demand in East Asia. Estimating exchange rate elasticities for countries in the region is difficult because many imports are used to produce goods for re‐export. An exchange rate appreciation that reduces East Asian exports will also reduce the demand for imported inputs that are used to produce exports. To correct for this bias this paper examines consumption imports, since these goods are intended primarily for the domestic market. Results from several specifications indicate that currency appreciations and increases in income in East Asian countries would significantly increase imports into the region.