The responisiveness of Canadian imports to income and price movements

Abstract

The key variables in international trade policy are imports and exports elasticities with respect to income and prices. Thus their estimation has drawn~particular attention in the post war period. Most of the studies gathered fruitful results in the sense that their estimates appreared with the apriori expected signs and magnitudes. However, opinions are not identical on the relevent importance of price and income elasticities. M. Kreinin (8) does not even attempt to compute income elasticities while H. Houthakker and S. Magge (5) claim that the latter are of stronger importance and their disparities between imports and exports are responsible, in the long run, for the performance of the Balance of Payment for several countries. In the present work, estimates are presented of import demand functions, for Canada, a country with a widely open economy.