Abstract
This paper presents estimates of the elasticity of substitution between imported and domestic intermediate goods in South African manufacturing. These elasticities are known as “Armington” elasticities after the Armington assumption that imported and domestic goods in any sector are imperfect substitutes. Numerical estimates of these elasticities are important in order to model the effects of tariff reform in South Africa. The estimates obtained are contrasted with current assumptions about the magnitudes of the elasticities in modelling, and the shortcomings of the data and methodology used in estimating these elasticities are also identified.
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