Greek disaggregated import and export demand functions: A reply

Abstract

Hitiris' comment on my 1975 paper1 is appreciated. In principle, it is desirable, although not always possible, to (specify and then) try to estimate separate import and export demand functions per commodity or commodity group by distinguishing into countries (i. e., union partner and the rest of the world) of origin in the case of imports and of destination in the case of exports, so that the specific trade relations of the country under consideration would be preserved. It should be understood, however, that it may not be possible to deal with all aspects of an economic phenomenon in a single study, for this is an expensive and time consuming task. In this connection I wrote in my earlier paper2 that the grouping of importable and exportable commodities reported there was in accordance with the input-output classification system of Greece, as was required by a major research project (a sectoral planning model for the Greek economy) of which my 1975 paper should be viewed as a supplement. To put it differently, the objective of that paper was, among other things, to provide a link between the productive sectors of the economy and the country's foreign trade of commodities and, as is well-known, the grouping of economic avtivities in a sectoral (input-output) model is based on the international standard industrial classification rather than on the standard international trade classification (SITC) of commodities, which is usually employed in empirical papers of international trade. All this intends to emphasize the great amount of effort made to arrange the available raw data from Greece's Foreign Trade Yearbook (roughly some 8,000 items per year) in the commodity groups presented in my earlier paper, and then construct suitable volume and price (weighted unit value index) variables.