Linking Armington and CET Elasticities of Substitution and Transformation to Price Elasticities of Import Demand and Export Supply: A Note for CGE Practitioners

Armington and constant-elasticity-of-transformation (CET) functions are routinely used in computable general equilibrium (CGE) Models to model foreign trade. The CET function is applied to producer decisions about whether to export and or sell at home. Decisions by domestic demanders whether to purc...

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Autores principales:	Lofgren, Hans, Cicowiez, Martín
Formato:	Articulo Documento de trabajo
Lenguaje:	Inglés
Publicado:	2018
Materias:	Ciencias Económicas price elasticities computable general equilibrium Armington constant-elasticity-of-transformation
Acceso en línea:	http://sedici.unlp.edu.ar/handle/10915/65385 http://www.cedlas.econo.unlp.edu.ar/wp/wp-content/uploads/doc_cedlas222.pdf
Aporte de:	SEDICI (UNLP) de Universidad Nacional de La Plata

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institution	Universidad Nacional de La Plata
institution_str	I-19
repository_str	R-120
collection	SEDICI (UNLP)
language	Inglés
topic	Ciencias Económicas price elasticities computable general equilibrium Armington constant-elasticity-of-transformation
spellingShingle	Ciencias Económicas price elasticities computable general equilibrium Armington constant-elasticity-of-transformation Lofgren, Hans Cicowiez, Martín Linking Armington and CET Elasticities of Substitution and Transformation to Price Elasticities of Import Demand and Export Supply: A Note for CGE Practitioners
topic_facet	Ciencias Económicas price elasticities computable general equilibrium Armington constant-elasticity-of-transformation
description	Armington and constant-elasticity-of-transformation (CET) functions are routinely used in computable general equilibrium (CGE) Models to model foreign trade. The CET function is applied to producer decisions about whether to export and or sell at home. Decisions by domestic demanders whether to purchase imports or domestic output are covered by the Armington function. The Armington function is a constant-elasticity-of-substitution (CES) function. This note is concerned with the links between (a) price elasticities of import demand and constant elasticities of substitution between demand for imports and domestic output; and (b) price elasticities of export supply and constant elasticities of transformation between supply to exports and domestic market. These links are important since researchers often may wish to compare estimates of price elasticities to the price elasticities implied by elasticities of substitution and transformation. In this note, price elasticities related to each function are derived from their representation in many CGE models – the function itself and a first-order optimality condition. In an appendix, these representations are derived from cost minimization and revenue maximization given prices and the “technology” embodied by the Armington and CET functions.
format	Articulo Documento de trabajo
author	Lofgren, Hans Cicowiez, Martín
author_facet	Lofgren, Hans Cicowiez, Martín
author_sort	Lofgren, Hans
title	Linking Armington and CET Elasticities of Substitution and Transformation to Price Elasticities of Import Demand and Export Supply: A Note for CGE Practitioners
title_short	Linking Armington and CET Elasticities of Substitution and Transformation to Price Elasticities of Import Demand and Export Supply: A Note for CGE Practitioners
title_full	Linking Armington and CET Elasticities of Substitution and Transformation to Price Elasticities of Import Demand and Export Supply: A Note for CGE Practitioners
title_fullStr	Linking Armington and CET Elasticities of Substitution and Transformation to Price Elasticities of Import Demand and Export Supply: A Note for CGE Practitioners
title_full_unstemmed	Linking Armington and CET Elasticities of Substitution and Transformation to Price Elasticities of Import Demand and Export Supply: A Note for CGE Practitioners
title_sort	linking armington and cet elasticities of substitution and transformation to price elasticities of import demand and export supply: a note for cge practitioners
publishDate	2018
url	http://sedici.unlp.edu.ar/handle/10915/65385 http://www.cedlas.econo.unlp.edu.ar/wp/wp-content/uploads/doc_cedlas222.pdf
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Linking Armington and CET Elasticities of Substitution and Transformation to Price Elasticities of Import Demand and Export Supply: A Note for CGE Practitioners

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