Variable Elasticities and Non-Price Rationing in the Import Demand Function of Canada, 1956:1-1973:4

Abstract

The empirical results presented in this paper were obtained from estimating import demand functions for Canada at a relatively disaggregated level using quarterly data for the period 1956-73 with the following two objectives: first, to assess the importance of non-price rationing, represented by the aggregate capacity utilization rate, for import demand in Canada; and secondly, to test the common assumption that income and price elasticities of import demand are invariant with respect to the size of change in income and price. The specification of the estimated model is detailed in the following section, and the third section contains a summary of the empirical results. The main conclusions of this paper are summarized in the fourth section, while the sources of data are presented in the last section.