Growth, Expansion of Markets, and Income Elasticities in World Trade

Wu, Yi

doi:10.1111/j.1467-9396.2008.00770.x

Cited by 5 publications

(2 citation statements)

References 24 publications

(34 reference statements)

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“…3. Authors, such as Wu (2005), have also found evidence of the correlation between export and income growth as predicted by the BoP model, however, the findings do not point to structural elasticities and, hence, do not lend support to the BoP constraint approach to economic growth. 4.…”

Section: Notesmentioning

confidence: 73%

On the Transmission Mechanism of Monetary Constraints to the Real Side of the Economy

Ferreira¹

2007

International Review of Applied Economics

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Contrary to the predictions of the theory underlying international finance, inflows of capital triggered by financial liberalisation have neither equalised real interest rates nor increased income growth in many emerging economies. We explain this puzzle by developing a model that combines the balance-of-payments constraint approach to economic growth with a less stringent version of the real interest rate parity hypothesis. The model's foundations are based on robust empirical findings or well-established macroeconomic models. We show that a perverse combination of income elasticities of demand for imports and exports generates slow income growth and high real interest rates. As domestic income grows and imports rise faster than exports, the real exchange rate is expected to depreciate in order to clear the balance of payments (or the foreign exchange rate market). An incipient capital outflow arises and interest rates increase. Faster adjustment in capital rather than in the goods market therefore generates a higher real interest rate differential between the domestic small open-economy and the rest of the world. The long run analysis shows that a constant degree of risk aversion implies a positive equilibrium real interest rate differential that affects economic growth. A permanent increase in default risk driven by persistent current account imbalances thus impacts on long run growth. The model's results are illustrated with evidence from the three major Latin America economies: Argentina, Brazil and Mexico.Real interest rate differentials, balance of payments constraint,

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Section: Notesmentioning

confidence: 73%

On the Transmission Mechanism of Monetary Constraints to the Real Side of the Economy

Ferreira¹

2007

International Review of Applied Economics

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“…Regarding the first assumption, most studies find a K-V coefficient (in output terms) of about 0.3 to 0.5, that would correspond to a coefficient in terms of employment growth lower than 1. As for the second condition,Wu (2008), for example, provides estimates for ܽ and ߯ in a sample of 35 countries, and his results show that in 17 of the 23 countries where the Marshall-Lerner condition holds, ߯ is larger than ܽ.…”

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confidence: 99%

Structural transformation and economic development : can development traps be avoided?

Lavopa¹

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People interested in the research are advised to contact the author for the final version of the publication, or visit the DOI to the publisher's website.• The final author version and the galley proof are versions of the publication after peer review.• The final published version features the final layout of the paper including the volume, issue and page numbers. Link to publication General rightsCopyright and moral rights for the publications made accessible in the public portal are retained by the authors and/or other copyright owners and it is a condition of accessing publications that users recognise and abide by the legal requirements associated with these rights.• Users may download and print one copy of any publication from the public portal for the purpose of private study or research. • You may not further distribute the material or use it for any profit-making activity or commercial gain • You may freely distribute the URL identifying the publication in the public portal.If the publication is distributed under the terms of Article 25fa of the Dutch Copyright Act, indicated by the "Taverne" license above, please follow below link for the End User Agreement:

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Income and Price Elasticities of China's Exports

Zhang

Tian

2013

China and World Economy

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The appearance of new product varieties and improvements in the quality of goods have both played key roles in the rapid growth of China's exports. However, these two important elements have not been formally integrated into the demand equations for China's exports. As we demonstrate in this paper, income elasticity will be underestimated if new varieties of goods and quality improvements are omitted in price index and quantity index calculations, which are necessary for estimating the export demand function. Moreover, the faster new product varieties enter export markets, the greater the underestimation will be. In this paper, we develop an export demand equation that takes into account new product varieties and improvements in quality, and then calculate the demand function for China's exports using the data from 1992 to 2006. According to our estimation, the short‐term income elasticity of demand for China's exports is approximately 2.34, and the short‐term price elasticity is approximately –0.65. Our estimation predicts an increase in China's export value in the case of an RMB appreciation or export rebate rates reduction in the short term, due to the low price elasticity of China's exports, whose absolute value is less than 1. Our findings are novel and could have significant policy implications.

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Growth, Expansion of Markets, and Income Elasticities in World Trade

Cited by 5 publications

References 24 publications

On the Transmission Mechanism of Monetary Constraints to the Real Side of the Economy

On the Transmission Mechanism of Monetary Constraints to the Real Side of the Economy

Structural transformation and economic development : can development traps be avoided?

Income and Price Elasticities of China's Exports

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