May 13th, 2019

Discussion Paper 2019/3 is now available: El-Shagi, M. / Sawyer, W.C. / Tochkov, K.: The Income Elasticity of Import Demand - A Meta Survey

Abstract:

Import demand has been a major research topic in international economics for the past 80 years because of its importance for analyzing trade and evaluating trade policies. The goal of this paper is to survey the literature and conduct a meta-analysis of empirical studies on import demand with the intention of clarifying the e ffect of economic development on income elasticity. In particular, we test the hypothesis that higher income levels are associated with a more elastic import demand. We apply a combination of parametric and non-parametric methods on estimates from a sample of 152 papers published over the period 1975-2014 and fi nd that this relationship is signi cant and robust. Speci fically, kernel densities of income elasticity estimates for high-income countries in North America and Europe are shown to exceed those for poorer parts of the world. The results from quartile regressions confi rm this pattern and establish its robustness when controlling for the e ffect of model speci fications.

 

GET THE ARTICLE