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Jurnal Internasional Mikro
Jurnal Internasional Mikro
DOI 10.1007/s10368-014-0266-y
O R I G I N A L PA P E R
1 Introduction
Price elasticities in any market reflect the sensitivity of changes in quantity in response
to a change in price. An elasticity of greater than one, for example, indicates that a 1 %
decline in price level results in a more than 1 % increase in quantity sold resulting in an
increase in total revenue. Inpayments is a concept used in international trade reflecting a
country’s export earnings. Similarly, outpayments is a measure of import cost. Whether
currency devaluation or depreciation improves the difference between a country’s
inpayments and outpayments will depend upon how price elastic are rest of the world
demand for that country’s exports and that country’s own import demand. Standard
textbook in international economics provide mathematical proof that if a devaluation or
Valuable comments of two anonymous referees are greatly appreciated. Remaining errors, however, are ours.
M. Bahmani-Oskooee (*) : A. S. S. Hosny
The Center for Research on International Economics and Department of Economics,
The University of Wisconsin-Milwaukee, Milwaukee, WI 53201, USA
e-mail: bahmani@uwm.edu
562 M. Bahmani-Oskooee, A.S.S. Hosny
1
It should be mentioned that Egypt is not included in any of the studies mentioned above.
2
The methodology in this paper follows closely Bahmani-Oskooee and Tanku (2008).
Price and income elasticities: evidence from commodity trade 563
Since data are reported by Egypt, we specify the import and export demand models
from Egypt’s perspective. After modifying the models used by Houthakker and Magee
(1969) and Bahmani-Oskooee (1986) to conform to commodity level data, we adopt
the following specification for Egypt’s import of commodity i from the U.S.:
PMi
ln Mit ¼ α þ β ln YEG;t þ λ ln þ εt ð1Þ
PDEG t
Where Mi is quantity of commodity i imported by Egypt from U.S. As mentioned
above, one driving force of imports in any country is the level of economic activity in
that country. Thus, Egypt’s real income or output, YEG, is included in the specification
and is expected to exert positive impact on her imports of commodity i. Therefore, an
estimate of β is expected to be positive. Assuming some degree of substitution between
imports and domestically produced goods, import price of commodity i, PMi relative to
domestic price level, PDEG, is included as another determinant. It is expected that an
estimate λ to be negative.
Due to symmetry between import and export demand models, we assume U.S.
demand for Egypt’s export of commodity i (Xit) depends positively on the U.S. income
(YUS,t) and negatively on Egypt’s export price (PXi) relative to the domestic price level
in the U.S. (PDU.S.) as in Eq. (2):
0 0 0 PXi 0
ln Xt ¼ α þ β ln YUS;t þ λ ln
i
þ εt ð2Þ
PDUS t
b b 0
Once (1) and (2) are estimated, the ML condition will be met if λ þ λ > 1 .
Estimates of (1) and (2) by any method only yield the long-run income and relative
price elasticities. In order to estimate the short-run elsticities and make sure that the
variables are converging toward their long-run equilibrium values, we incorporate the
short-run dynamics into both specifications and express them as error-correction
models. Pesaran et al. (2001) offer a unique approach where there is no need for pre-
unit-root testing and all short-run and long-run coefficients could be estimated in one
step as opposed to two-step procedure of Engle and Granger (1987). The error-
correction models following Pesaran et al. (2001) are as follows:
X n
X n X n
PM i
ΔlnM it ¼ a þ b j ΔlnY EG;t− j þ c j Δln þ d j ΔlnM it− j
j¼0 j¼0
PD EG t− j j¼1
PM
þ σ0 LnM it−1 þ σ1 lnY EG;t−1 þ σ2 ln þ ut ð3Þ
PDEG t−1
And
X m
X m X m
PX i
ΔlnX t ¼ μ þ
i
ϕ j ΔlnY US;t− j þ ψ j Δln þ φ j ΔlnX it− j
j¼0 j¼0
PD US t− j j¼1
PX i
þ θ0 lnX it−1 þ θ1 lnY US;t−1 þ θ2 ln þ vt ð4Þ
PDUS t−1
Pesaran et al. (2001) propose adding the linear combination of lagged level variables
as a proxy for lagged error term in Engle-Granger (1987) specification. They then
564 M. Bahmani-Oskooee, A.S.S. Hosny
propose using the standard F test to establish their joint significance. If lagged level
variables are jointly significant, then they are said to be cointegrated. Although the
application of the F test follows standard procedure from the literature, i.e., using the
sum of squared residuals from restricted versus unrestricted models, it has new critical
values that Pesaran et al. (2001) tabulate. A lower bound critical value is provided when
all variables in a given model are integrated of order zero or I(0). An upper bound
critical value is provided when all variables are integrated of order one or I(1). They
then demonstrate that the upper bound could also be used to establish joint significance
even if some variables are I(0) and some I(1). Since almost all macro variables are
either I(0) or I(1), there is no need for pre-unit-root testing under this approach.3
Models (3) and (4) are estimated by applying OLS. The short-run effects are then
inferred by the coefficient estimates obtained for the first-differenced variables. The
long-run income and price elasticities in (3) are obtained by the estimates of σ1 and σ2
that are normalized on σ0. By the same token, the long-run income and price in (4) are
calculated by the estimates of θ1 and θ2 normalized on θ0.4 Furthermore, in order to test
whether the adjustment of variables in each model are toward their long-run equilib-
rium values, the normalized long-run coefficient and Eqs. (1) and (2) are used to
calculate error terms as in Eqs. (5) and (6):
b b
δ1 δ2 PMi
b
εt ¼ ln Mit − ln YEG;t − ln ð5Þ
b
δ0 b
δ0 PDEG t
b b
0
θ1 θ2 PXi
b
εt ¼ ln Xit − ln YUS;t − ln ð6Þ
b
θ0 b
θ0 PDUS t
We then lag both error terms by one period and denote them by ECM t−1 ¼ b εt−1 and
0 0
ECM t−1 ¼ b εt−1 . Finally, we replace the lagged level variables in Eq. (3) by ECMt-1 and
in Eq. (4) by ECM′t-1 to arrive at the following error-correction models:
X n X n
PM i
ΔlnM t ¼ a þ
i
b j ΔlnY EG;t− j þ c j Δln ð7Þ
j¼0 j¼0
PDEG t− j
Xn
þ d j ΔlnM it− j þ λECM t−1 þ ut
j¼1
3
Although Boyd et al. (2001) propose a method of establishing exogeniety of right-hand-side variables,
Bahmani-Oskooee and Hajilee (2010, p. 650) argue that the ARDL approach adopted in this paper accounts
for this by assuming all the lagged values to serve as instruments. Indeed, Pesaran et al. (2001, p. 299) argue
that “our approach is quiet general in the sense that we can use a flexible choice for the dynamic lag structure
in …..as well as allowing for short-run feedbacks.” We also tested the statioanrity of the variables to make sure
that we have no I(2) variable. Indeed, we do not.
4
For details of normalization see Bahmani-Oskooee and Tanku (2008) and for some other application of this
approach see For other applications of this approach see Bahmani-Oskooee and Hegerty (2007), Halicioglu
(2007), Narayan et al. (2007), Tang (2007), Mohammadi et al. (2008), Wong and Tang (2008), De Vita and
Kyaw (2008), Payne (2008), Bahmani-Oskooee and Gelan (2009), Chen and Chen (2012), and Wong (2013).
Price and income elasticities: evidence from commodity trade 565
Xm Xm Xm
PX i
ΔlnX it ¼ μ þ ϕ j ΔlnY US;t− j þ ψ j Δln þ φ j ΔlnX it− j
j¼0 j¼0
PDUS t− j j¼1
0
þ λ0 ECM t−1 þ vt ð8Þ
Once (7) and (8) are estimated, a significantly negative estimates of λ and λ′ will
support adjustment toward long run.
3 The results
In this section we estimate the two error-correction models using trade flows of 36
industries that trade between Egypt and the U.S. Quarterly data over the period 1994I-
2007IV are used to carry out the estimation. Following the literature a maximum of six
lags are imposed on each first differenced variable and Akaike’s Information Criterion
(AIC) is sued to select the optimum lags.5 The results for each optimum Egypt’s import
demand model along with diagnostics are reported in Table 1. Due to the volume of the
results we refrain from reporting the short-run coefficient estimates. However, they are
available upon request from the authors.6
Concentrating on long-run coefficient estimates, we gather that the relative import
price term carries its expected negative coefficient in almost all cases. The coefficient is
significant at least at the 10 % level in 27 out of 36 industries, as identified by * above
each coefficient. The income elasticity is positive and significant in only six industries
coded 03, 05, 12, 22, 55, and 89. It is significant and negative in nine industries coded
17, 26, 29, 33, 65, 74, 75, 77, and 81. These are industries that as Egypt’s economy
grows they produce more of import-substitute goods and therefore import less of these
goods (Bahmani-Oskooee 1986). These long-run coefficients will not be considered
spurious only if we establish cointegration among variables. As the results of the F test
reveal since our calculated F statistic is significant in almost all cases, the variables do
have long run relationship.
Several other diagnostic statistics are also reported in Table 1. Using the same
optimum lags, we estimate Eq. (6) to judge the significance of ECMt-1. As mentioned
before, If adjustment of variables is to be toward their long-run values, we expect
ECMt-1 to carry a significantly negative coefficient which is indeed the case from the
results in Table 2. Reported in Table 2 is also the Lagrange Multiplier (LM) statistics
which is sued to test serial correlation among the residuals. It is distributed as χ2 with
four degrees of freedom since data are quarterly. Given its critical value of 9.48, only in
the results for industry coded 84, the residuals suffer from serial correlation. Ramsey’s
RESET test which is also distributed as χ2 but with one degree of freedom is also
reported. This statistic is used to judge misspecification of each optimum model. Given
5
There was no significant change in the results when other lag selection criteria were used.
6
It should be mentioned that there was at least one significant short run relative price term in export industries
coded 00,02,04,05,06,06,09,22,24,26,27,33,42,52,54,55,56,61,63,64,65,66,67,69,74,75,77,81,82,84, and 89
and in import industries coded 00, 02, 03, 06, 07, 09, 11, 22, 24, 27, 29, 33, 42, 52, 54, 55, 56, 59, 61, 63,
64, 65, 66, 67, 69, 74, 75, 77, 81, 82, and 89. The J-Curve effect, i.e., short-run positive and long-run negative
was observed in export industries coded as 03, 06, 59, and 82 and import industries coded as 04, 05, 22, 42,
and 74.
566
SITC Description cons ln YEG ln PM/PDEG F ECMt-1 LM RESET CUSUM (SQ) Adj R2
00 Live animals other than animals of division 03 20.13** −0.91 −0.94*** 9.71*** −0.73*** 3.56 0.0009 S (S) 0.84
02 Dairy products and birds’ eggs 20.40 −1.24 −2.99* 2.99 −0.41*** 2.77 0.27 S (S) 0.36
03 Fish, crustaceans, aquatic invertebrates and preparations thereof −13.21* 1.92*** −1.41*** 10.15*** −0.76*** 4.36 0.21 S (S) 0.77
04 Cereals and cereal preparations 18.76*** −0.26 −1.04*** 7.89*** −0.91*** 4.98 1.58 S (S) 0.51
05 Vegetables and fruit 7.16*** 0.15 −1.82*** 12.68*** −1.18*** 0.91 0.21 S (S) 0.55
06 Sugars, sugar preparations and honey −6.09 0.89** −2.54*** 21.77*** −1.18*** 5.69 0.001 S (S) 0.84
07 Coffee, tea, cocoa, spices, and manufactures thereof 6.12 0.02 −1.75*** 16.70*** −1.04*** 5.92 0.37 S (S) 0.63
09 Miscellaneous edible products and preparations 18.61*** −0.64* −0.78 6.12** −0.52*** 1.44 1.43 S (S) 0.71
11 Beverages 192.60 −7.73 28.92 3.25 −0.04*** 4.23 2.91* S (S) 0.48
12 Tobacco and tobacco manufactures 3.66 0.97*** 1.81*** 13.82*** −0.96*** 2.39 1.68 S (S) 0.54
22 Oil-seeds and oleaginous fruits −21.59 2.87* −1.33** 2.91 −0.66*** 3.13 0.26 S (S) 0.81
24 Cork and wood 5.74 0.46 −1.21*** 2.74 −0.36*** 4.39 0.009 S (S) 0.95
26 Textile fibers and their wastes (not manufactured into yarn or fabric) 34.59** −2.03* −0.13 9.46*** −0.74*** 8.70 0.28 S (S) 0.37
27 Crude fertilizers, and crude minerals (excluding coal and petroleum) 0.71 0.91*** −0.66 15.34*** −0.93*** 6.50 0.13 U (S) 0.67
29 Crude animal and vegetable materials 18.02*** −0.64* −1.39*** 13.34*** −0.95*** 4.61 0.54 S (S) 0.71
33 Petroleum, petroleum products and related materials 19.08*** −1.02* −1.74*** 12.46*** −0.84*** 2.53 0.39 S (S) 0.72
42 Fixed vegetable fats and oils, crude, refined or fractionated −0.07 −0.001 −4.61*** 2.87 −0.40*** 2.13 0.72 S (S) 0.87
52 Inorganic Chemicals 10.08*** 0.06 −1.02*** 9.56*** −0.75*** 3.75 2.71* S (S) 0.76
54 Medicinal and pharmaceutical products 11.46 −0.06 0.63 2.85 −0.22*** 2.80 0.02 S (S) 0.94
55 Essential oils & perfume materials; polishing & cleansing preparations −0.18 1.03*** −0.77** 8.63*** −0.74*** 1.46 5.1** S (S) 0.83
56 Fertilizers (other than those of group 27) 5.39 0.25 −1.24*** 14.32*** −1.02*** 1.03 0.87 S (S) 0.68
59 Chemical materials and products 13.95*** −0.09 −0.88*** 10.58*** −0.68*** 0.75 3.38* S (S) 0.80
61 Leather, leather manufactures, and dressed furskins 13.41 −0.65 −0.71* 2.91 −0.30*** 5.16 0.10 S (S) 0.61
M. Bahmani-Oskooee, A.S.S. Hosny
Table 1 (continued)
SITC Description cons ln YEG ln PM/PDEG F ECMt-1 LM RESET CUSUM (SQ) Adj R2
63 Cork and wood manufactures (excluding furniture) 6.13 0.42 −0.98*** 9.07*** −0.74*** 4.25 0.91 S (S) 0.98
64 Paper, paperboard and articles of paper pulp −0.27 0.63 −2.65 1.07 −0.14* 1.57 1.79 S (S) 0.52
65 Textile yarn, fabrics, made-up articles, and related products 22.84*** −1.08** −1.33** 5.01*** −0.64*** 0.89 0.004 S (S) 0.47
66 Non-metallic mineral manufactures 10.67*** −0.0065 −1.10*** 17.64*** −1.05*** 4.91 0.10 S (S) 0.91
67 Iron and steel 10.38** 0.05 −1.55*** 5.40*** −0.45*** 5.32 0.43 S (S) 0.64
69 Manufactures of metals 15.66*** −0.29 −1.32** 2.13 −0.40** 2.26 1.77 S (S) 0.74
74 General industrial machinery and equipment, and machine parts 16.90*** −0.26** −1.37*** 9.47*** −0.70*** 2.46 0.11 S (S) 0.75
75 Office machines and automatic data-processing machines 9.10*** 0.35** −0.99*** 9.16*** −0.72*** 4.44 0.20 S (S) 0.61
77 Electrical machinery, apparatus & appliances and electrical parts 19.89*** −0.56** −0.78*** 7.32*** −0.64*** 4.82 0.06 S (S) 0.69
Price and income elasticities: evidence from commodity trade
81 Prefabricated buildings; sanitary, plumbing, and heating 21.53*** −1.01* −0.79 3.74 −0.56*** 1.24 0.14 S (S) 0.54
82 Furniture, and parts thereof; bedding, mattresses & mattress support 7.88 0.21 −1.21* 4.44** −0.35*** 1.49 0.99 S (S) 0.41
84 Articles of apparel and clothing accessories 11.39 −0.31 −0.34 2.27 −0.49** 9.6** 0.10 S (S) 0.33
89 Miscellaneous manufactured articles 8.92*** 0.32* −0.81*** 8.31*** −0.73*** 4.83 0.06 S (S) 0.89
***Significant at the 1 % significance level, **at 5 %, *at 10 %. The critical values for the F test come from Pesaran et al. (2001, Case III, p 300). The upper bound critical values at the
1 %, 5 %, and 10 % level are 6.36, 4.85, and 4.14 respectively
567
568 M. Bahmani-Oskooee, A.S.S. Hosny
its critical values of 3.84, it is significant only in the case of industry 55. Thus, except
industry coded 55, all other optimum models are correctly specified. To test for stability
of all coefficients (i.e., short run as well as long run estimates) following the literature
we apply Brown et al.’s (1975) CUSUM and CUSUMSQ tests to the residuals of each
optimum model. While stable estimates are identified by “S”, unstable ones are
identified by “U”. Clearly all estimates are stable. 7 Finally, adjusted R2 is also
reported to reflect on goodness of fit in each optimum model.
Following the same procedure, we turn to estimates of Egypt’s export demand
model of each industry and again report results similar to Table 1 in Table 2.
Clearly, the relative price term carries a negative and significant coefficient in 25 out
of 36 industries. Thus, it appears that Egypt can boost its export of these goods by
devaluation or cutting export prices. The U.S. income elasticity of significantly positive
in 12 industries and it is significantly negative in five industries coded 07, 29, 63, 64,
and 84. Once again, as the U.S. economy grows, U.S. produces more of import
substitute goods and imports less of these goods.
Again, our long-run analysis is only valid if we establish cointegration in
any optimum model that either income or relative price term carried a signif-
icant coefficient. The results of the F test indeed supports cointegration in every
model in which there was at least one significant coefficient. The ECM′t-1
carries a significantly negative coefficient in all models signifying importance
of adjustment toward long run. Again, residuals in most models are autocorre-
lation free as judged by the LM statistic. Reflected by the RESET statistic,
most optimum models are correctly specified and do not suffer from any
structural break (per results of CUSUM and CUSUMSQ tests). Finally, adjusted
R2 reflects a good fit in most models.
We are now in a position to combine results from Tables 1 and 2 and infer the sum of
absolute value of price elasticities so that we can judge the Marshall-Lerner condition.
Note that we only consider the price elsticities that are negative and significant. The
sum is reported in Table 3. We also report trade share of each industry to determine
whether industry size plays any role.
It is clear from Table 3 that the ML condition is met in 28 out of 36 cases,
implying that depreciation of Egyptian pound against the U.S. dollar will im-
prove the trade balance of these 28 industries in the long run. All large
industries, i.e., industries coded 04 (with 43 % share of the market), 22 (with
7.20 % of market share), 33 (with 5.45 % market share), and 74 (with 3.49 %
market share) will benefit from currency depreciation. These four industries
posses almost 60 % of market share. All in all, since the ML condition is
satisfied in most industries, Egypt can devalue its currency and enjoy an im-
provement in it’s overall trade balance with the U.S. in the long run.8
7
For graphical presentation of these tests see Bahmani-Oskooee et al. (2005).
8
Others have used traditional approaches to estimate import and export demand models. Examples include
King (1993), Alse and Bahmani-Oskooee (1995), Charos et al. (1996),Truett and Truett (2000), Du and Zhu
(2001), Love and Chandra (2005), Agbola and Damoense (2005), Narayan and Narayan (2005), and Narayan
et al. (2007).
Table 2 Empirical Results & Diagnostic Tests – Export Equation
SITC Description cons ln YUS ln PX/PDUS F ECM′t-1 LM RESET CUSUM (SQ) Adj R2
00 Live animals other than animals of division 03 −51.2** 3.64*** −0.10 3.77 −0.57*** 2.21 0.005 S (S) 0.66
02 Dairy products and birds' eggs −34.11 2.40 −2.42 4.20** −0.46*** 4.51 0.02 S (S) 0.55
03 Fish, crustaceans, aquatic invertebrates and preparations thereof 1.25 0.11 −1.94*** 7.67*** −0.55*** 2.99 0.006 S (S) 0.39
04 Cereals and cereal preparations −126.4* 8.32*** −0.60 11.93*** −0.77*** 11.5** 2.03 S (S) 0.63
05 Vegetables and fruit −32.1** 2.65*** −0.81* 7.17*** −0.62*** 2.79 0.09 S (S) 0.55
06 Sugars, sugar preparations and honey −78.8** 5.44*** −0.39* 23.56*** −1.21*** 3.13 0.37 S (S) 0.64
07 Coffee, tea, cocoa, spices, and manufactures thereof 44.6** −1.87** 0.41 13.95*** −1.12*** 7.81* 0.05 S (S) 0.49
09 Miscellaneous edible products and preparations −43.7** 3.37*** 0.34 19.75*** −1.11*** 3.83 4.57** S (S) 0.61
11 Beverages −17.56 1.66 −0.03 6.84*** −0.63*** 3.29 0.36 S (S) 0.25
12 Tobacco and tobacco manufactures 38.31 −2.09 −1.50 2.96 −0.36*** 4.97 15.8** S (S) 0.27
22 Oil-seeds and oleaginous fruits 0.94 0.44 −0.58 7.72*** −0.62*** 2.96 1.02 S (U) 0.30
24 Cork and wood −77.98 5.26*** −0.55*** 14.01*** −0.90*** 1.63 0.10 S (S) 0.46
Price and income elasticities: evidence from commodity trade
26 Textile fibers and their wastes (not manufactured into yarn or fabric) 0.27 1.36 1.36 1.92 −0.31** 5.55 1.57 U (S) 0.46
27 Crude fertilizers, and crude minerals (excluding coal and petroleum) −89.9** 6.12*** −1.41*** 9.20*** −0.77*** 6.76 5.93 S (U) 0.94
29 Crude animal and vegetable materials 21.1** −0.49* −0.13 18.03*** −1.25*** 0.67 1.69 S (S) 0.61
33 Petroleum, petroleum products and related materials −47.46 3.36 −2.42*** 16.34*** −1.01*** 1.20 0.06 S (U) 0.58
42 Fixed vegetable fats and oils, crude, refined or fractionated −75.0** 5.09*** −0.80*** 10.99*** −0.79*** 2.12 0.22 S (S) 0.44
52 Inorganic Chemicals 86.75 −4.91 −1.26* 3.63 −0.33*** 5.13 0.54 S (S) 0.52
54 Medicinal and pharmaceutical products −10.65 1.04 −0.44*** 14.24*** −0.91*** 4.63 5.72** S (S) 0.51
55 Essential oils & perfume materials; polishing & cleansing preparations 6.05 0.23 −1.29*** 13.96*** −0.83*** 2.53 3.19* S (S) 0.87
56 Fertilizers (other than those of group 27) −34.75 2.75* −1.37*** 9.22*** −0.82*** 1.16 8.22** S (U) 0.40
59 Chemical materials and products 29.98 −1.60 −1.89*** 17.30*** −1.01*** 1.21 0.04 S (U) 0.50
61 Leather, leather manufactures, and dressed furskins 2.37 0.21 −0.54*** 15.13*** −0.96*** 1.28 6.57 S (S) 0.54
569
570
Table 2 (continued)
SITC Description cons ln YUS ln PX/PDUS F ECM′t-1 LM RESET CUSUM (SQ) Adj R2
63 Cork and wood manufactures (excluding furniture) 62.6** −3.57** −1.01*** 16.94*** −0.97*** 4.42 0.95 S (S) 0.60
64 Paper, paperboard and articles of paper pulp 41.2** −2.11* −0.59** 14.06*** −0.91*** 2.64 0.02 S (S) 0.48
65 Textile yarn, fabrics, made-up articles, and related products 20.34* −0.47 −1.49*** 4.42*** −0.33*** 9.17* 0.19 S (S) 0.93
66 Non-metallic mineral manufactures −47.4** 3.29** −1.51*** 10.26*** −0.67*** 3.53 1.64 S (S) 0.64
67 Iron and steel −82.82 5.09 −4.20 2.76 −0.27*** 1.51 1.29 S (U) 0.47
69 Manufactures of metals −5.08 0.85* −1.45*** 18.58*** −0.90*** 5.17 0.89 S (S) 0.79
74 General industrial machinery and equipment, and machine parts 10.66 −0.24 −0.62*** 13.26*** −0.88*** 6.47 0.30 S (S) 0.55
75 Office machines and automatic data-processing machines 21.88 −1.02 −0.88*** 13.28*** −0.82*** 4.61 0.04 S (S) 0.62
77 Electrical machinery, apparatus & appliances and electrical parts −0.75 0.46 −0.90*** 11.42*** −0.82*** 0.80 4.76 S (S) 0.50
81 Prefabricated buildings; sanitary, plumbing, and heating −2.28 0.62 −0.80** 6.33*** −0.48*** 2.54 2.91* S (S) 0.69
82 Furniture, and parts thereof; bedding, mattresses & mattress support −12.2** 1.39*** −1.11*** 21.78*** −0.93*** 10.3** 4.94** S (U) 0.86
84 Articles of apparel and clothing accessories 31.1** −1.05** −0.94*** 9.84*** −0.76*** 14.4** 0.36 S (S) 0.97
89 Miscellaneous manufactured articles 1.42 0.54 −0.24** 29.08*** −1.26*** 4.32 2.60 S (S) 0.66
***Significant at the 1 % significance level, ** at 5 %, * at 10 %. The critical values for the F test come from Pesaran et al. (2001, Case III, p 300). The upper bound critical values at the
1 %, 5 %, and 10 % level are 6.36, 4.85, and 4.14 respectively
M. Bahmani-Oskooee, A.S.S. Hosny
Price and income elasticities: evidence from commodity trade 571
Trade shares are for 2007Q4. Only statistically significant coefficients are used to calculate
b b
jλj þ jλ0 j ¼ δ2 þ θ2
bδ0 bθ0
572 M. Bahmani-Oskooee, A.S.S. Hosny
Appendix
Quarterly data over the period 1994Q1-2007Q4 are used to carry out the empirical
analysis. The data sources are as follows:
a. Central Agency for Public Mobilization and Statistics (CAPMAS), Arab Republic
of Egypt.
b. International Financial Statistics IMF (CD-ROM)
c. Ministry of Economic Development, Arab Republic of Egypt.
Price and income elasticities: evidence from commodity trade 573
Variables
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