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A Comparison of Armington Elasticity Estimates in the Trade Literature

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  • Ahmad, Saad
  • Montgomery, Chris
  • Schreiber, Samantha

Abstract

The Armington elasticity is one of the key parameters in quantitative trade models as it determines the level of substitutability between domestic and imported varieties of a good in a country. Estimates of this key parameter have been provided by several empirical studies using different methods and data sources. Our goal in this paper is to summarize and compare Armington elasticity estimates at the sector level that are found in this trade literature. We first discuss some of the most commonly used methodologies for estimating Armington elasticities as well the main advantages and challenges associated with each method. Using a common concordance, we then compare these Armington elasticity estimates at the sector level and assess if different levels of aggregation are driving the observed differences across studies. We find that the different estimation strategies, in combination with different levels of sectoral aggregation, has contributed to a wide range of estimates in the literature.

Suggested Citation

  • Ahmad, Saad & Montgomery, Chris & Schreiber, Samantha, 2020. "A Comparison of Armington Elasticity Estimates in the Trade Literature," Conference papers 333215, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:333215
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    References listed on IDEAS

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    1. Thomas Chaney, 2008. "Distorted Gravity: The Intensive and Extensive Margins of International Trade," American Economic Review, American Economic Association, vol. 98(4), pages 1707-1721, September.
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    3. Reinert, Kenneth A. & Roland-Holst, David W., 1992. "Armington elasticities for United States manufacturing sectors," Journal of Policy Modeling, Elsevier, vol. 14(5), pages 631-639, October.
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