Abstract
In this paper, the authors develop and estimate time-series models of the rational-expectations equilibrium laws of m otion for several U.S. commodity imports: bauxite, cocoa, coffee, and petroleum. The theoretical model is based upon the optimizing behavi or of firms that import in the presence of supply shocks, delivery la gs, and adjustment and inventory holding costs. One of the important features of the empirical model is that the authors are able to estim ate elasticities that distinguish between responses to changes in the environment that importers expect to be relatively temporary versus relatively permanent. Copyright 1987 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.
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