OBJECTIVE
The major objective of this paper is to estimate for three CARICOM member countries – Guyana, Jamaica, and Trinidad and Tobago- their long-run and short-run trade elasticities of export demand.
METHODS/DATA
The bounds test for analyzing level relationships within the conditional autoregressive distributed lag (ARDL) framework is applied to a traditional export demand model. In keeping with that model, the demand for exports is assumed to be a function of the following variables: (1) the price for the country’s exported goods; (2) the exporting country’s domestic price for foreign currency; (3) the alternative price encountered by prospective buyers of the exported goods; and (4) the level of foreign activity. The data for estimating the export demand equations for Guyana, Jamaica, and Trinidad and Tobago are taken from various sources, such as the International Monetary Fund, International Financial Statistics; the Inter-American Development Bank, Economic and Social Progress in Latin America; the United Nations Statistics Division, National Accounts Statistics; United Nations Conference on Trade and Development (UNCTAD), Handbook of Statistics; and the Economic Report of the President published by the United States Government Printing Office.
Results/Expected Results
In this model, it is expected that the demand for exports will fall when the price for exports goes up. At the same time, the demand for exports is expected to rise when there is an increase in the domestic price for foreign currency, or an increase in the competitor’s price for the exported goods, or an increase in the level of foreign economic activity.