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Separability and the Specification of Foreign Trade Functions

journal contribution
posted on 2023-06-08, 05:07 authored by L. Alan WintersL. Alan Winters
A universal assumption of models allocating a country's imports among suppliers is that demand is separable over foreign and domestic sources. Nearly as common are the assumptions that import demands are homothetic and mutually separable. This paper explores the theoretical implications of these assumptions and then tests them, applying Deaton and Muellbauer's `Almost Ideal Demand System¿ to U.K. data on manufactures covering 1952¿1979. It uses Lagrange Multiplier tests. Both homogeneity and separability are overwhelmingly rejected. A model of import demand without these restrictions is introduced which, while not entirely satisfactory, suggests a direction for future research.

History

Publication status

  • Published

Journal

Journal of International Economics

ISSN

0022-1996

Publisher

Elsevier

Issue

3-4

Volume

17

Page range

239-263

Pages

25.0

Department affiliated with

  • Economics Publications

Full text available

  • No

Peer reviewed?

  • Yes

Legacy Posted Date

2012-02-06

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