Estimation of Armington elasticities in a CGE economy-energy-environment model for Europe

Németh, Gabriella, Szabó, László and Ciscar, Juan Carlos (2011) Estimation of Armington elasticities in a CGE economy-energy-environment model for Europe. Economic Modelling, 28 (4). pp. 1993-1999. DOI 10.1016/j.econmod.2011.03.032

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The main goal of the article is to estimate Armington elasticities of the energy and energy-intensive sectors of the GEM-E3 computable general equilibrium model. The model follows the standard two-stage budget optimisation of the consumer by first optimising between domestically produced and imported goods and, then, by country of origin. A panel data econometric framework is used here with dynamic adjustment to capture both the long and short term elasticities for the studied six aggregated sectors in Europe. The estimated long-term elasticities are in line with the literature, but higher than those used in the GEM-E3 model. The results suggest that consumer choice appears to be more price sensitive between the domestic and the composite imported goods, and amongst the importers, than already assumed in the model.

Item Type:Article
JEL classification:Q40 - Energy: General
C23 - Single Equation Models; Single Variables: Panel Data Models; Spatio-temporal Models
F14 - Empirical Studies of Trade
Divisions:Faculty of Business Administration > Institute for Environmental Science > Regional Centre for Energy Policy Research
Subjects:Energy economy
ID Code:2737
Deposited By: Péter Kotek
Deposited On:22 Mar 2017 13:53
Last Modified:22 Mar 2017 13:53

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