NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Kwan Yong Lee

University of North Dakota
293 Centennial Drive Stop 8369
Grand Forks, ND 58202-8369

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Institutional Affiliation: University of North Dakota

NBER Working Papers and Publications

April 2017The Income Elasticity of Import Demand: Micro Evidence and An Application
with David Hummels: w23338
We construct a synthetic panel of household expenditures from the Consumer Expenditure Survey (CEX) and use the Quadratic Almost Ideal Demand System to estimate expenditure shares and income elasticities of demand that vary by good-income-time. We show that the size and distribution of income shocks drives expenditure change in a manner that varies profoundly across traded goods. Our estimates of expenditure shares and income elasticities could be useful in many applications that seek to explain changes in trade behavior from the demand side, and indicate the strong sensitivity of trade to changes in the tails of the income distribution. We explore an application involving the Great Trade Collapse. Income-induced expenditure changes are positively correlated with the cross-good pattern ...

Published: David Hummels & Kwan Yong Lee, 2018. "The Income Elasticity of Import Demand: Micro Evidence and An Application," Journal of International Economics, .

 
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