Econometric estimation of Armington import elasticities for a regional CGE model of the Illinois economy

Karen Turner, Soo Jung Ha, Geoffrey J.D. Hewings, Peter McGregor, Kim Swales

Research output: Contribution to journalArticlepeer-review

Abstract

One of the main concerns associated with the development and use of regional CGE models is the determination of key parameter values, particularly substitution and other price elasticities. A common problem is the lack of appropriate regional data for econometric estimation. Consequently, it is important to identify key parameters that are likely to be important in determining quantitative results and then to prioritize these for estimation where appropriate data are available. In this paper, the focus is on the estimation of the regional trade (import) substitution parameters, which tend to be important in analysis for regional economies (given their openness to trade). Here, commodity import elasticities for the Illinois economy are estimated and tested in a single region CGE model of the Illinois economy. In our econometric estimation, we apply a model that takes account of market size and distance in estimating the substitutability between commodities produced in Illinois and other US states.

Original languageEnglish (US)
Pages (from-to)1-19
Number of pages19
JournalEconomic Systems Research
Volume24
Issue number1
DOIs
StatePublished - Mar 2012

Keywords

  • Armington import elasticities
  • CGE models
  • Input-output tables
  • parameter estimates
  • regional modeling

ASJC Scopus subject areas

  • Economics and Econometrics

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