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A dynamic analysis of US banana demand by source: a focus on Latin American suppliers

Author

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  • Andrew Muhammad
  • Steven Zahniser
  • Esendugue Greg Fonsah

Abstract

We estimated US banana demand disaggregated by exporting country using the generalised dynamic Rotterdam model. Results indicated that dynamic factors, prices, and total expenditures played an important role in determining how the USA allocated banana imports across supplying countries. We were particularly interested in Guatemala's emergence as the leading US supplier and Costa Rica's decline. Overall, there was no significant difference in the demand estimates between the two countries. The dynamic adjustment estimates indicated that both countries were positively affected by their past exports, and the long-run expenditure elasticities indicated that both were particularly sensitive to changes in total US expenditures. However, demand estimates indicated that there is significant price competition between the two countries and the uncompensated price elasticities indicated that the demand for Costa Rican bananas was relatively more elastic in the long run.

Suggested Citation

  • Andrew Muhammad & Steven Zahniser & Esendugue Greg Fonsah, 2015. "A dynamic analysis of US banana demand by source: a focus on Latin American suppliers," International Journal of Trade and Global Markets, Inderscience Enterprises Ltd, vol. 8(4), pages 281-296.
    • Handle: RePEc:ids:ijtrgm:v:8:y:2015:i:4:p:281-296
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    Cited by:

    1. Chia Chiun Ko & Paul Frijters & Gigi Foster, 2018. "A Tale of Cyclones, Exports and Surplus Forgone in Australia's Protected Banana Industry," The Economic Record, The Economic Society of Australia, vol. 94(306), pages 276-300, September.

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