ESTIMATION OF UNITED STATES IMPORT DEMAND AND EXPORT SUPPLY IN A MULTI-INPUT MULTI-OUTPUT MODEL, USING HUMAN CAPITAL AND R & D AS FACTORS OF PRODUCTION (RESEARCH, DEVELOPMENT)
Traditionally the estimation of the import and export functions has been done by specifying either linear or loglinear functions of some income and relative price variables then using, usually, ordinary least squares technique. This procedure is subject to a wide range of criticisms due to its lack of theoretical foundation and because of its implicit assumptions. In this thesis import and export functions will be derived within a more general theoretical framework first introduced by Samuelson and investigated empirically by Foley and Sidrauski in their treatment of the production side of the economy. This more general framework was also used by Diewert in his study of the functional forms for profit and transformation functions, and by Kohli in his study of the foreign sector of the Canadian economy. A framework similar to that of Kohli is used to estimate the structure of U.S. foreign trade. We depart, however, from Kohli by adding human capital and R & D as inputs to the model. Even though human capital and R & D have been considered as factors affecting trade flows by Keesing, Gruber, Metha and Vernon and have been also considered as inputs in the production side of the economy, they have not yet been incorporated as inputs in a multi-input, multi-output profit function in which imports and exports are explicitly considered. The scope of this thesis is to eradicate this omission and to use a translog profit function to estimate all input-output own and cross price elasticities as well as elasticities of transformation, complementarity and intensity for the United States economy when imports, human capital, R & D, non-human capital and labor are used as inputs, and exports, consumption and investment as outputs.
Networked Digital Library of Theses and Dissertations