Price elasticities in commodity trade models and external trade statistics

Graduation date: 1988The purpose of this study is to investigate the role of the\ud source of the external trade statistics in measuring the price\ud responsiveness of foreign demands and relative price competitiveness\ud of the major exporting countries in trade of agricultural commodities\ud in international markets. In particular, the papers included in this\ud study examine the apparent misspecification of commodity models due\ud to the use of trade data based on exporting countries reports, rather\ud than the reports of importing countries. The results indicate that\ud the use of export data instead of import data more likely produces\ud biased price parameter estimates. The research is conducted in three\ud distinct and yet related papers, resulting in the presentation of\ud three separate manuscripts.\ud The first paper presents a critical review of two different\ud commodity trade modeling approaches frequently employed for\ud estimation of price responsiveness of trade flows and market shares \ud in trade literature.\ud The second paper discusses the nature of agricultural commodity\ud trade statistics. It reviews factors causing discrepancies in\ud external trade statistics and compares advantages and disadvantageous\ud associated with the use of export and import data in estimating the\ud trade flow and market share price responsiveness. Import reports are\ud found to provide more reliable foreign demand and market share price\ud responsiveness since they exclude speculative market activities from\ud demand and market share equations for estimation.\ud The third paper examines major factors affecting U.S.\ud competitiveness in the exports of agricultural commodities in\ud general, wheat in particular. Utilizing importers' data, the\ud empirical econometric results suggest that the continuation of U.S.\ud export promotional expenditures in developed countries (DCs) causes\ud U.S. market share to decline relative to the share of its competitors\ud in these markets although such expenditures are found to contribute\ud to U.S. expansion into less developed countries (LDCs) markets.\ud Relative prices, export reliability ratio (ratio of exports to a\ud given destination to total production), production and population in\ud importing countries are found to be the important factors that affect\ud the market shares of major exporting countries in import markets