Is the "Houthakker-Magee" Finding Durable? Evidence from Disaggregated Trade Flows between China and Korea

Title
Is the "Houthakker-Magee" Finding Durable? Evidence from Disaggregated Trade Flows between China and Korea
Author(s)
강기천
Keywords
DEMAND; PRICES
Issue Date
201211
Publisher
WUHAN UNIV JOURNALS PRESS
Citation
ANNALS OF ECONOMICS AND FINANCE, v.13, no.2, pp.299 - 316
Abstract
Using income growth to explain trade flows has a long history in international trade. This paper examines the income elasticities for the categories of goods to be consistent with the theoretical implications, using the trade flows between China and Korea over the sample period of 1991-2008. The new trade theory implies that the inclusion of new variety terms reduces the magnitude of income elasticities, disaggregation of trade flows yields different magnitudes of income elasticity, and income elasticity of differentiated goods is higher than that of homogeneous goods. The empirical findings are consistent with the implication from the new trade theory. However, the asymmetry in income elasticity (Houthakker-Magee finding) is quite durable. This paper enhances the consistency between the theories and evidence.
URI
http://hdl.handle.net/YU.REPOSITORY/26949
ISSN
1529-7373
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상경대학 > 경제금융학부 > Articles
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