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New goods play a central role in many trade and growth models. We use detailed trade and firm-level data from India to investigate the relationship between declines in trade costs, imports of intermediate inputs, and domestic firm product scope. We estimate substantial gains from trade through access to new imported inputs. Moreover, we find that lower input tariffs account on average for 31% of the new products introduced by domestic firms. This effect is driven to a large extent by increased firm access to new input varieties that were unavailable prior to the trade liberalization.

This paper provides a systematic estimation of import demand elasticities for a broad group of countries at a very disaggregated level of product detail. We use a semiflexible translog GDP function approach to formally derive import demands and their elasticities, which are estimated with data on prices and endowments. Within a theoretically consistent framework, we use the estimated elasticities to construct Feenstra's (1995) simplification of Anderson and Neary's trade restrictiveness index (TRI). The difference between TRIs and import-weighted tariffs is shown to depend on the tariff variance and the covariance between tariffs and import demand elasticities.

PurposeThe purpose of this paper is to explore the empirical relationship between the share of immigrants and the price elasticity of import demand.Design/methodology/approachWe estimate the import demand function including the interaction term of the share of immigrants and relative import price, using panel data of 76 countries/areas.FindingsThe coefficient of the interaction term is significantly positive, that is, a higher share of immigrants weakens the negative effect of the relative import price on import demand. Our findings reveal the negative relationship between the share of immigrants and the price elasticity of import demand.Practical implicationsThe share of immigrants is increasing in the present era of globalization, and it is possible that the role of exchange rate as the price adjustment mechanism in international trade become lower in the future.Originality/valueThis research considers different price elasticities for import goods by immigrants and natives.

This study empirically investigates the dynamics of the relationship between import demand and foreign exchange reserves for an oil-rich and high-income developing country, Oman. This study employs the Autoregressive Distributed Lag (ARDL) model to investigate the impact of real income, domestic prices, and foreign exchange reserves on aggregate and disaggregated import demand function. Results reveal that total imports are significantly affected by domestic prices only; whereas, demand for goods import is influenced by income. The level of foreign exchange reserves does not influence import demand function. These findings indicate that currency peg stabilization efforts, foreign asset leakages and varying sources of foreign currency could have weakened the link between foreign reserves and import levels. Considering domestic prices and income, competition and efficient production of local goods and services should be further encouraged, especially concerning ongoing issues like food security. Understanding import dynamics enhances robust import forecasts, international trade planning and policy formulation.

In this paper, we study the impact of environmental taxation on trade in environmental goods (EGs). Using a trade model in which demand for and supply of EGs are endogenous, we show that the relationship between environmental taxation and demand for EGs follows a bell-shaped curve. Above a cutoff tax rate, a higher tax rate can reduce bilateral trade in EGs because there are too many low-productivity EG suppliers. Based on trade data from 1995 to 2012 across the EU-27 countries, our empirical results are in accordance withthe predictions of our model when we use the Asia-Pacific Economic Cooperation (APEC) list of EGs. We find that environmental taxation (measured as the ratio of environmental tax revenoe to GDP) has a monotonically positive impact on the number of trading partners. Furthermore, we show that if countries were to apply an environmental tax rate equal to 3.96% (e.g., the tax rate maximizing international trade in EGs), then trade in EGs across the EU-27 members would experience an increase of 25.33 percentage points. The results are mixed when we analyse the EGs on the OECD list. While the results for the the number of trading partners are confirmed when we use this list, there is no effect of environmental taxation on import demand.

Imports of Intermediate Goods (MIGs) in Mexico represent 80% of the total imports, and there are closely related to exports and production for domestic demand. The aim of this paper is to provide demand and real exchange price elasticities of MIGs in Mexico. As a first step, a Vector Error Correction Model (VEC) was used; nevertheless, this estimation showed endogeneity problems. As a second step, an Instrumental Variables Model was constructed, having multicollinearity problems between variables. Therefore, two separated VECs were estimated for the relations MIG-Exports and MIG-Domestic Demand; coefficients are statistically significant in both models. Results demonstrated that exports contribute very little too Mexican GDP, exports exhibit an inelastic demand for intermediate goods and high propensity to import. Intermediate imports for domestic consumption also show a high import elasticity (but less than unity) and a much smaller propensity to import; therefore, this portion of the economy has more possibilities to successfully implement policies to increase national content. Las importaciones de bienes intermedios en México representan el 80% del total de las importaciones, y están estrechamente relacionadas con las exportaciones y la producción para la demanda interna. El objetivo de este trabajo es proporcionar las elasticidades de la demanda y del precio real de intercambio de los OMG en México. Como primer paso, se utilizó un Modelo de Corrección de Errores Vectoriales (VEC); sin embargo, esta estimación mostró problemas de endogeneidad. Como segundo paso, se construyó un Modelo de Variables Instrumentales, que presentaba problemas de multicolinealidad entre las variables. Por lo tanto, se estimaron dos VEC separados para las relaciones MIGExportaciones y MIG-Demanda Interna; los coeficientes son estadísticamente significativos en ambos modelos. Los resultados demostraron que las exportaciones contribuyen muy poco al PIB mexicano, las exportaciones muestran una demanda inelástica de bienes intermedios y una alta propensión a la importación. Las importaciones intermedias para el consumo interno también muestran una elevada elasticidad importadora (pero inferior a la unidad) y una propensión mucho menor a importar; por lo tanto, esta porción de la economía tiene más posibilidades de aplicar con éxito políticas para aumentar el contenido nacional.

Corruption and imperfect contract enforcement dramatically reduce international trade. This paper estimates the reduction using a structural model of import demand in which insecurity acts as a hidden tax on trade. We find that inadequate institutions constrain trade as much as tariffs do. We also find that omission of indices of institutional quality biases the estimates of typical gravity models, obscuring a negative relationship between per capita income and the share of total expenditure devoted to traded goods. Finally, we argue that cross-country variation in the effectiveness of institutions and the consequent variation in the prices of traded goods offer a simple explanation for the stylized fact that high-income, capital-abundant countries trade disproportionately with each other.

PurposeA better understanding of the determinants of demand through accurate estimates of the elasticity of import demand can help policymakers and exporters improve their market access and competitiveness. This study analyzed the EU's demand for imported potato from major suppliers between 1994 and 2018, with the aim to evaluate the competitiveness of Egyptian potato.Design/methodology/approachThis study adopted an import-differentiated framework to investigate demand relationships among the major potato suppliers to the EU's. To evaluate the competitiveness of Egyptian potato on the EU market, expenditure and price demand elasticities for various suppliers were calculated and compared.FindingsThe empirical results indicated that as income allocation of fresh potatoes increases, the investigated EU markets import more potatoes from other suppliers compared to imports from Egypt. The results show that EU importers may switch to potato imports from other suppliers as the import price of Egyptian potatoes increases, which enter the EU markets before domestically produced potatoes are harvested.Research limitations/implicationsDue to data unavailability, the present study relied on yearly data on quantities and prices of EU potato imports. A higher frequency of observations should allow for considering seasonal effects, and thereby providing a more transparent picture of market dynamics and demand behavior of EU countries with respect to potato import from various sources of origin.Originality/valueThe study used a system-wide and source differentiated approach to analyze import demand. In particular, the empirical approach allowed for comparing different demand models (AIDS, Rotterdam, NBR and CBS) to filter out the superior and most suitable model for that data because the suitability and performance of a demand model depends rather on data than on universal criteria.

Wind energy, a captivating parameter of clean energy transformations, requires abundant metallic minerals to operate its technologies: wind cells, wind turbines, wind generators, turbine blades, etc. Thus, the mineral-driven wind energy generation process thrives the worldwide mineral import flows. Within the import demand function analysis, we scrutinize the mineral import demand’s response to the USA’s wind energy installation capacity from 1996 to 2020. We utilize the dynamic autoregressive distributed lag (DARDL) simulation technique to check for the co-integrating association between mineral imports and wind power installation capacity within the purview of the oil and mineral prices, exchange rates, and income factors. Our findings demonstrate a significant long-term relationship between mineral import demand and wind power installed capacity in the USA. Besides, mineral price does not sustain the Marshallian demand hypothesis, and oil price holds the substitution effect proposition in the long and short run. In addition, the exchange rate remains trivial in the long run but significantly consequential in the short run to influence mineral imports. Finally, the income dynamic substantially fosters mineral import growth in the USA. Our results remain robust across the kernel-based ordinary least squares (KRLS) machine learning algorithm approach. Therefore, we suggest elevating imported metallic minerals for clean energy transitions by producing the optimal size of wind energy in the USA.