The impact of purchasing power parity on auto foreign trade

The impact of purchasing power parity on auto foreign trade In this study, the validity of the assumption saying that the import and export are a function of prices as in the classical, neo-classical approaches is studied within the framework of the import and export of automobile vehicles between 1997 and 2003 in Turkey and the EU countries which are automobile manufacturers. The price here is considered as the purchasing power parity. The effect of the purchasing power parity on the automobile import and export is determined by using classical models with constant coefficients, and fixed and random effects models with constant slope coefficients and a constant term differing according to units and/or time. The models comprise balanced linear panel data models. The likelihood ratio test and F-test are used in the selection of fixed effects and classical models; and the Lagrange multiplier test is used in the selection of random effects and classical models. As for the selection of fixed and random effects models, the Hausman test is used. As a result of these tests, the fixed effects models covering both individual and time effects are selected as the most appropriate import and export models. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Quality & Quantity Springer Journals

The impact of purchasing power parity on auto foreign trade

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Publisher
Springer Netherlands
Copyright
Copyright © 2008 by Springer Science+Business Media B.V.
Subject
Social Sciences; Methodology of the Social Sciences; Social Sciences, general
ISSN
0033-5177
eISSN
1573-7845
D.O.I.
10.1007/s11135-008-9173-z
Publisher site
See Article on Publisher Site

Abstract

In this study, the validity of the assumption saying that the import and export are a function of prices as in the classical, neo-classical approaches is studied within the framework of the import and export of automobile vehicles between 1997 and 2003 in Turkey and the EU countries which are automobile manufacturers. The price here is considered as the purchasing power parity. The effect of the purchasing power parity on the automobile import and export is determined by using classical models with constant coefficients, and fixed and random effects models with constant slope coefficients and a constant term differing according to units and/or time. The models comprise balanced linear panel data models. The likelihood ratio test and F-test are used in the selection of fixed effects and classical models; and the Lagrange multiplier test is used in the selection of random effects and classical models. As for the selection of fixed and random effects models, the Hausman test is used. As a result of these tests, the fixed effects models covering both individual and time effects are selected as the most appropriate import and export models.

Journal

Quality & QuantitySpringer Journals

Published: Apr 26, 2008

References

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