Pc. Athukorala et J. Riedel, MODELING NIE EXPORTS - AGGREGATION, QUANTITATIVE RESTRICTIONS AND CHOICE OF ECONOMETRIC METHODOLOGY, Journal of development studies, 33(1), 1996, pp. 81-98
The current debate regarding the robustness of estimates of export dem
and and supply elasticities for NIEs is examined by modelling manufact
ured exports from Korea. The results suggest that normalisation of the
export demand function for price rather than quantity is an important
issue in estimating export demand functions of small countries, and t
hat estimates of export demand elasticities at high levels of aggregat
ion are subject to potentially powerful biases, when the aggregate con
sists of categories which are subject to quantitative restrictions. If
proper modelling procedures are followed, it is likely that the small
country assumption will find far more empirical support than it has h
itherto.