Showing papers on "Bilateral trade published in 1982"

An Empirical Demand and Supply Model of Multilateral Trade

Abstract: T HIS study develops an empirical model for the joint determination of the demand and supply for bilateral trade, in which both bilateral quantities and bilateral prices are endogenous. In theory each bilateral demand (supply) equation would contain income (output) variables together with all relevant bilateral prices. Given differences in the commodity composition of trade and given price discrimination, export prices of any country will differ over destination countries. In addition, transport costs and tariffs will drive a wedge between bilateral export and import prices. Thus, a bilateral demand and supply system for aggregate trade among n countries would require consideration of 2n2 price variables, an overwhelming task for empirical research. As a compromise between pure theory and practice, we use a two-tier construction in which total import demand and export supply are determined by aggregate real income (output) and relative aggregate prices, and then bilateral trade flows are determined by theory-based allocations featuring relative bilateral prices. This approach is more general than either specifying only bilateral demand behavior (assuming infinitely elastic supply at given prices) or including the supply side through stringent assumptions such as constant market shares.' For empirical application the model is extended to include proxies for nonprice competition and structural factors, a flowadjustment specification of dynamics, and a trend/cycle decomposition of income (output). The model is estimated from a panel of bilateral trade flows covering the United States, Japan, France, Germany, and United Kingdom for the years 1958-1974. The theoretical model is developed in section II, the empirical specification is presented in section III, and the empirical results are discussed in section IV.

Modelling Interregional and International Trade Using Information Theory

Abstract: A systems model for the short to medium-term analysis of interregional and international trade is formulated and discussed. The model embodies elements of information theory and general equilibrium/disequilibrium analysis within an iterative framework. Three major components which form separate submodels deal with (i) the prediction of trade flows, (ii) the prices and costs of the traded goods, and (iii) world market adjustments in the short run. These three submodels are interactive, and a distinctive feature of the resulting formulation is the appearance of identical (embedded) constraints in the price and quantity submodels. Information theory provides a practical means of considering trade barriers, zones of preference (under bilateral trade agreements) and other factors relating to the terms of trade, as well as various theoretical assumptions which may warrant investigation. The result is an extremely versatile vehicle for trade modelling in situations where the availability of trade data is limited.

Japan-U.S. Trade Relations

Abstract: This report discusses trade relations between the U.S. and Japan. Commercial aspects of the United States-Japan alliance, in recent years, have begun to dominate the dialogue between the two nations. In particular, friction points have developed over chronic U.S. bilateral trade deficits with Japan, allegations of Japanese protectionism, and rapid incursions into U.S. markets by Japanese export products.