An Update of the OECD International Trade Equations

Abstract

JT03359753Complete document available on OLIS in its original format This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. ECO/WKP(2014) Working Papers describe preliminary results or research in progress by the author(s) and are published to stimulate discussion on a broad range of issues on which the OECD works.Comments on Working Papers are welcomed, and may be sent to OECD Economics Department, 2 rue André-Pascal, 75775 Paris Cedex 16, France, or by e-mail to eco.contact@oecd.org This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. © OECD (2014)You can copy, download or print OECD content for your own use, and you can include excerpts from OECD publications, databases and multimedia products in your own documents, presentations, blogs, websites and teaching materials, provided that suitable acknowledgment of OECD as source and copyright owner is given. All requests for commercial use and translation rights should be submitted to rights@oecd.org ECO/WKP(2014)25 3 ABSTRACT/RÉSUMÉ An update of the OECD international trade equationsThis paper provides a detailed description of recent research to re-estimate and re-specify the international trade volume and price equations that are used in the OECD Economics Department to analyse and project international trade developments. The set of countries covered by the estimations has been significantly enlarged, with estimates of the factors affecting export performance, import penetration and trade prices presented for 41 countries, including countries that have recently joined the OECD (Chile, Estonia, Israel and Slovenia) and major emerging countries (Argentina, Brazil, China, India, Indonesia, Russia and South Africa). Reflecting the heterogeneity of countries included in the estimations, procedures for grouping them have been modified to allow for country specifics as much as possible. Structural breaks over the estimation period -which now typically covers the mid-1980s to 2012 and includes the global trade collapse of 2009 -are dealt with by the flexible modelling of deterministic trends, including the allowance for several rather than single trend reversals. JEL classification codes: F14; F17

Unpicking Portugal’s export performance: A microdata analysis

“…Note: Panel A shows a trade-weighted measure of Portuguese export prices relative to those of competitor economies. Further explanation of the index can be found in Morin and Schwellnus, 2014. In Panel B, the measure is taken from Araujo, Chalaux and Haugh, 2018, where the share of products is the number of products with a revealed symmetric comparative advantage on the total number of products exported by each country. A country has a revealed comparative advantage when the export share of product p in their export basket is higher than the corresponding share of product p in world exports.…”

“…where PXGS is the export deflator and PXC is competitor export prices (see Morin and Schwellnus (2014) for details). In the absence of relative export prices at the product-level, this country-level indicator is a good proxy of changes in price competitiveness, as it takes into account the trade-weighted changes in the relative exchange rate adjusted export prices of all Portugal's competitors for each specific export market.…”

Public policy reforms to further improve Portuguese export performance

“…In Panel D, a trade-weighted measure of Portuguese export prices relative to those of competitor economies is presented. Further explanation of the index can be found in (Morin and Schwellnus, 2014 To explore the drivers of Portuguese export performance, a regression analysis was undertaken with the dependent variable being the growth in Portuguese exports over the 1995-2016 period. The analysis was performed using highly disaggregated product-level data (HS 6-digit level), which provided a large enough dataset to perform country-specific time-series analysis.…”

The Use of Models in Producing OECD Macroeconomic Forecasts

“…6 Where there are signs of an increasing global inconsistency, the Trade Team endeavours to correct it, usually by interacting with the Desks responsible for the country forecasts which depart from the trade model in a direction which contributes to the global imbalance. The trade model provides projections for the key aggregate national accounts trade variables for each country, which take account of domestic activity, export weighted markets, relative price competitiveness and trend developments (Morin and Schwellnus, 2014).…”