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Allowing for Group Effects When Estimating Import Demand for Source and Product Differentiated Goods

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  • Muhammad, Andrew

Abstract

In this study an import demand model (differential production model) is presented that is used in estimating the demand for source and product differentiated goods simultaneously. Unlike the traditional import demand models, this model can account for changes in relative group expenditures. Expenditure estimates differed when comparing the differential production model and Rotterdam model results. Results showed that if group revenue shares are relatively fixed, then the bias in expenditure estimates due to omitting group effects will be small when using traditional demand models such as the AIDS or Rotterdam models. As relative group shares significantly change and diverge the bias increases, particularly for imports representing a larger share of group expenditures.

Suggested Citation

  • Muhammad, Andrew, 2008. "Allowing for Group Effects When Estimating Import Demand for Source and Product Differentiated Goods," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6364, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea08:6364
    DOI: 10.22004/ag.econ.6364
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    References listed on IDEAS

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    1. Beach, Charles M & MacKinnon, James G, 1979. "Maximum Likelihood Estimation of Singular Equation Systems with Autoregressive Disturbances," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 20(2), pages 459-464, June.
    2. Henneberry, Shida Rastegari & Hwang, Seonghuyk, 2007. "Meat Demand in South Korea: An Application of the Restricted Source-Differentiated Almost Ideal Demand System Model," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 39(1), pages 1-14, April.
    3. R. Carew & W. J. Florkowski & S. He, 2004. "Demand for Domestic and Imported Table Wine in British Columbia: A Source-differentiated Almost Ideal Demand System Approach," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 52(2), pages 183-199, July.
    4. Henneberry, Shida Rastegari & Hwang, Seong-huyk, 2007. "Meat Demand in South Korea: An Application of the Restricted Source-Differentiated Almost Ideal Demand System Model," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 39(1), pages 47-60, April.
    5. Jose Alberto Molina, 1997. "Modelling the Spanish imports of vehicles using a source differentiated demand system," Applied Economics Letters, Taylor & Francis Journals, vol. 4(12), pages 751-755.
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    Cited by:

    1. Rodrigo García Arancibia & Edith Depetris Guiguet, 2020. "Brazilian Import Demand of Dairy Products with Emphasis in the Mercosul Context [Demanda brasileira de importações de laticínios com ênfase no contexo do Mercosul]," Nova Economia, Economics Department, Universidade Federal de Minas Gerais (Brazil), vol. 30(2), pages 551-577, May-Augus.

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    Demand and Price Analysis; International Relations/Trade;

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