Export and output supply functions with endogenous domestic prices

Abstract

This paper deals with the estimation of export supply functions which has been neglected by the literature in favor of the export demand function. Reliable estimates of export supply elasticities are essential for the evaluation of trade policy interventions. The paper estimates short-run export and output price elasticities in Côte d'Ivoire. We attempt to improve on previous approaches by modeling exported goods and goods intended for domestic consumption as imperfect substitutes, incorporating the domestic demand for domestic output and endogenizing the domestic price. This should capture important feedback mechanisms missed by previous models.