STRUCTURAL APPROACH TO ANALYZE THE EFFECTS OF EXHCHANGE RATE ON IMPORT DEMAND

The effect exchange rates have on local prices may induce a change in relative prices and import demand. This study shows that substitutability, endogeneity of foreign price, elasticity of substitution, and degree of returns to scale influence the impacts exchange rates have on relative prices and import demand. In an empirical examination of the Korean beef market, this study found a decrease in relative prices and an increase in import demand when the U.S. dollar depreciates, and an increase in relative prices and a decrease in import demand when the U.S. dollar appreciates. However, the effect on relative prices is greater than the effect on import demand, implying that the foreign price elasticity of import demand is less than one.


Issue Date:
2010-02
Publication Type:
Conference Paper/ Presentation
DOI and Other Identifiers:
Louisiana State University (Other)
Agcenter (Other)
PURL Identifier:
http://purl.umn.edu/56415
Page range:
2-25
Total Pages:
25
JEL Codes:
F10; F11; F13
Note:
The purpose of this study is to determine the impact the exchange rate has on local prices and import demand.
Series Statement:
Selected Paper




 Record created 2017-04-01, last modified 2017-05-27

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