Estimating Elasticities for Tradable Services in Policy Simulations
Year: 2025
Type: article
Abstract: We provide new estimates of the Armington elasticities of substitution for several services sectors. Our approach relies on methods that utilize the theoretical relationship between the elasticity and profit margins in a monopolistic competition framework as described in Gervais and Jensen (2019) and Ahmad and Riker (2019). We find that the median elasticity of substitution is 5.65 at the NAICS 3-digit level and 5.42 at the more aggregated GTAP sector level. Finally, we illustrate the importance that these services trade elasticities can have on model outcomes in GTAP by simulating a hypothetical and stylized agreement that liberalizes services trade between the US and the UK.
DOI: 10.71476/n32y-sf54
Authors: Ahmed, Saad, Schreiber, Samantha
Institution: United States International Trade Commission
Language: English
Topic: Global trade and economics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W6921252539
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