WITS Import Demand Elasticities

[digital....@gmail.com]

I have been using this model for about a month now and I have a question with regards to the Import Demand Elasticities used by the model. I have been modelling several scenarios where the results given by the model have been quite bizarre. For example, on one occasion 80% of the total trade effect for the UK came from a single product line.

 

When looking at the import elasticity for this product, it was very high. Therefore, I was wondering how these elasticities were calculated and how often are they updated? Also I was wondering why for some products there are such a large range and why the elasticities vary by country as well as by product? (Unless you have data on every country for every product but that would mean you should have millions of potential elasticities?)

 

I have contacted you guys via email about this but I have received no reply. I do believe that results such as the UK result do really raise questions as to the reliability of the results and the usefulness of the model for analysis, if the fundamentals are inaccurate.

 

Also, would it be possible to let me know how the tariff revenue effects are calculated? Is it just taking the export level before tariff reduction and then multiplying by the tariff saving?

 

Thank you very much for your help and I hope to hear from you soon.

[Samuel Munyaneza]

Import Demand Elasticities were last updated in 2006.

For the methodology used to calculate these, please refer to this paper by Kee, Hiau Looi, Alessandro Nicita and Marcelo Olarreaga. "Import Demand Elasticities and Trade Distortions", Review of Economics and Statistics, 2008, vol. 90, no. 4, p. 666—682.

accessible for free here:

http://siteresources.worldbank.org/INTRES/Resources/469232-1107449512766/Restat_MS10322_accepted.pdf

To learn more about how SMART works, I am attaching two documents that, I hope,  will help you.

Best Regards,
----------------------------------------------------------------------------------------------------
Samuel Munyaneza
Officer-in-Charge, Trade Information Section
United Nations Conference on Trade and Development (UNCTAD)
Palais des Nations  E-8059
1211 Geneva 10
Switzerland

Phone: 41/22/917 5540
Fax: 41/22/907 0044
Email:samuel.m...@unctad.org

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