Publication detail

Estimating the Armington Elasticity: The Importance of Data Choice and Publication Bias

Author(s): Mgr. Josef Bajzík ,
prof. PhDr. Tomáš Havránek Ph.D.,
doc. PhDr. Zuzana Havránková Ph.D.,
PhDr. Jiří Schwarz Ph.D.,
Type: IES Working Papers
Year: 2019
Number: 19
Published in: IES Working Papers 19/2019
Publishing place: Prague
Keywords: Armington, trade elasticity, meta-analysis, publication bias, Bayesian model averaging
JEL codes: C83, D12, F14
Suggested Citation: Bajzik J., Havranek T., Irsova Z. and Schwarz J. (2019): "Estimating the Armington Elasticity: The Importance of Data Choice and Publication Bias" IES Working Papers 19/2019. IES FSV. Charles University
Abstract: A key parameter in international economics is the elasticity of substitution between domestic and foreign goods, also called the Armington elasticity. Yet estimates vary widely. We collect 3,524 reported estimates of the elasticity, construct 34 variables that reflect the context in which researchers obtain their estimates, and examine what drives the heterogeneity in the results. To account for inherent model uncertainty, we employ Bayesian and frequentist model averaging. We present the first application of newly developed non-linear techniques to correct for publication bias. Our main results are threefold. First, there is publication bias against small and statistically insignificant elasticities. Second, differences in results are best explained by differences in data: aggregation, frequency, size, and dimension. Third, the mean elasticity implied by the literature after correcting for both publication bias and potential misspecifications is 3.
Downloadable: wp_2019_19_bajzik_havranek_irsova_schwarz


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