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MEASURING PRICE ELASTICITY OF SECTORIAL IMPORTS
Author(s) -
KIM SOYOUNG,
LEE BYUNG HEE,
PARK SOO KYUNG
Publication year - 2012
Publication title -
pacific economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.34
H-Index - 33
eISSN - 1468-0106
pISSN - 1361-374X
DOI - 10.1111/j.1468-0106.2012.00578.x
Subject(s) - cointegration , economics , econometrics , vector autoregression , elasticity (physics) , autoregressive model , structural vector autoregression , macroeconomics , monetary policy , materials science , composite material
Previous published studies have estimated the long‐run cointegrating relationship to infer the price elasticity of imports, but a stable long‐run cointegrating relationship might not be detected in the data, especially in the case of sectoral data. This paper develops a method to estimate the price elasticity of imports based on a vector autoregression model, which can be applied when a stable long‐run cointegration relationship does not exist. The methods developed in past studies and our method are applied to Korean sectoral imports data to illustrate the usefulness of our method.