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Trade liberalization and the allocation over domestic and foreign supplies: a case study for Spanish manufacturing

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  • P. M. C. De Boer
  • C. Martinez
  • R. Harkema

Abstract

The purpose of the paper is to investigate whether Spain's accession to the European Union in 1986 caused a structural break in the allocation of total supplies of manufactures over domestic and foreign supplies. To that end the homogeneity-constrained Almost Ideal Demand System is used to specify the long-run equilibrium relationships between the shares in total supplies and total real demand and relative prices and a first-order error correction mechanism in order to describe the adjustment process to equilibrium. Using a formal statistical test, it turns out that a structural break actually occurred and led to a rather sharp decrease in the share of Spain and an increase in the shares of the other members of the European Union.

Suggested Citation

  • P. M. C. De Boer & C. Martinez & R. Harkema, 2000. "Trade liberalization and the allocation over domestic and foreign supplies: a case study for Spanish manufacturing," Applied Economics, Taylor & Francis Journals, vol. 32(6), pages 789-799.
    • Handle: RePEc:taf:applec:v:32:y:2000:i:6:p:789-799
    DOI: 10.1080/000368400322417
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    References listed on IDEAS

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    2. L Alan Winters, 2015. "Separability And The Specification Of Foreign Trade Functions," World Scientific Book Chapters, in: Non-Tariff Barriers, Regionalism and Poverty Essays in Applied International Trade Analysis, chapter 8, pages 149-173, World Scientific Publishing Co. Pte. Ltd..
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    6. BARTEN, Anton P., 1969. "Maximum likelihood estimation of a complete system of demand equations," LIDAM Reprints CORE 34, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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    Cited by:

    1. Camilo Sarmiento & Richard Just, 2005. "Empirical modelling of the aggregation error in the representative consumer model," Applied Economics, Taylor & Francis Journals, vol. 37(10), pages 1163-1175.

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