Elasticity of Demand for the Exports of a Single Country

Abstract

N international trade theory the concept of the elasticity of demand for a country's exports has had a long life. It is frequently advanced as one of the chief determinants of the effects of a currency revaluation, and recently has been the subject of some empirical studies. The justification of the first part of the present study, apart from its special interest for the country it deals with, Australia, lies in the fact that it attempts a more precise definition of the concept in measurable form than it has usually received, and that this definition leads to the study of the demand for exports one commodity at a time, instead of the demand for exports as a whole.' In the second part of the paper, similar methods are used to define and measure the elasticity of export demand with respect to income of the export market. The theoretical expressions obtained are applied to three principal Australian export commodities, using prewar data, to estimate in effect how their proceeds would have responded to a given change in the exchange rate, or in the income of the export market.