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Estimating import demand in the presence of seasonal trade and unobserved prices

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  • Andrew Muhammad

Abstract

Estimating import demand is particularly difficult when trade is seasonal because prices do not exist for observations with no recorded transaction. Fresh apple imports in the United Kingdom provide a perfect case of this particular problem due to periodic trade. In this study, the differenced version of the almost ideal demand system is employed for estimating import demand by source and an iterative procedure is developed for deriving choke prices (prices at which imports are zero) and import demand estimates. The appeal of this procedure is that the final estimates and choke prices are not sensitive to the starting values used for the initial estimation. When comparing the results of the choke price procedure to a more traditional approach of eliminating zeros by aggregating across countries, significant differences emerge. Results clearly show that the aggregate estimates do not adequately reflect the pattern of UK imports from seasonal suppliers.

Suggested Citation

  • Andrew Muhammad, 2013. "Estimating import demand in the presence of seasonal trade and unobserved prices," Applied Economics Letters, Taylor & Francis Journals, vol. 20(5), pages 446-451, March.
    • Handle: RePEc:taf:apeclt:v:20:y:2013:i:5:p:446-451
    DOI: 10.1080/13504851.2012.709595
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    References listed on IDEAS

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    Cited by:

    1. Arnade, Carlos & Kuchler, Fred, 2015. "Measuring the Impacts of Off-Season Berry Imports," Economic Research Report 229201, United States Department of Agriculture, Economic Research Service.
    2. Andrew Muhammad & S. Aaron Smith & Tun‐Hsiang Edward Yu, 2021. "COVID‐19 and cotton import demand in China," Agribusiness, John Wiley & Sons, Ltd., vol. 37(1), pages 3-24, January.
    3. Byung Min Soon & Jarrett Whistance, 2019. "Seasonal Soybean Price Transmission between the U.S. and Brazil Using the Seasonal Regime-Dependent Vector Error Correction Model," Sustainability, MDPI, vol. 11(19), pages 1-9, September.
    4. Seale, James L. Jr. & Zhang, Lisha & Traboulsi, Mohamad R., 2013. "Domestic and Foreign Sources of U.S. Demand for Fresh Vegetables and Fruits," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150769, Agricultural and Applied Economics Association.
    5. Heng, Yan & House, Lisa A., 2017. "Do U.S. Suppliers Benefit from South Korea-U.S. Free Trade Agreement? The Case of Orange Juice," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258396, Agricultural and Applied Economics Association.

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