Exports in the Econometric Model KOSMOS

Abstract

Equations for exports of manufactured goods and for services in KOSMOS, the macroeconometric model at NIER, are estimated. The equations are interpreted as representing foreign demand for Swedish exports. The formulation is based on the Armington-assumption and demand depends on a measure of foreign income and the Swedish export price, relative to a measure of the competitor’s price. The parameterestimates in both equations are reasonable and the forecasting behavior of the models is acceptable. The estimated long run price elasticities are: –1.3 for manufactured goods, and –0.7 for services. The estimated long run income elasticities are: 0.8 for manufactured goods, and 1.2 for services. * I would like to thank Lars-Erik Öller and Alek Markowski for valuable comments.

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