Modelling the Spanish imports of vehicles using a source differentiated demand system

Abstract

This paper models the Spanish imports of vehicles, differentiated both by goods and by origins, during the period 1963–1992, using a source differentiated Almost Ideal Demand System. We consider three vehicle goods, namely trucks, cars and tractors, which are imported from six different origins, Germany, the USA, France, the UK, Italy and other countries. Having first shown that the estimated model does not exhibit autocorrelation problems, the results are presented using the expenditure and price estimated elasticities. French trucks and tractors and US cars are the most luxurious imported vehicles. The Marshallian own-price elasticities reflect that Italian trucks, German cars and US tractors had the most insentitive demands to own-price changes. Finally, cross-price elasticities show weak effects.