A dynamic analysis of US banana demand by source: a focus on Latin American suppliers Online publication date: Tue, 03-Nov-2015
by Andrew Muhammad; Steven Zahniser; Esendugue Greg Fonsah
International Journal of Trade and Global Markets (IJTGM), Vol. 8, No. 4, 2015
Abstract: We estimated US banana demand disaggregated by exporting country using the generalised dynamic Rotterdam model. Results indicated that dynamic factors, prices, and total expenditures played an important role in determining how the USA allocated banana imports across supplying countries. We were particularly interested in Guatemala's emergence as the leading US supplier and Costa Rica's decline. Overall, there was no significant difference in the demand estimates between the two countries. The dynamic adjustment estimates indicated that both countries were positively affected by their past exports, and the long-run expenditure elasticities indicated that both were particularly sensitive to changes in total US expenditures. However, demand estimates indicated that there is significant price competition between the two countries and the uncompensated price elasticities indicated that the demand for Costa Rican bananas was relatively more elastic in the long run.
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