10.17889/E111246
Mejean, Isabelle
Imbs, Jean
Replication data for: Elasticity Optimism
ICPSR Inter-university Consortium for Political and Social Research
2014
10.1257/mac.20130231
10.1257/mac.20130231
V0
On average, estimates of trade elasticities are smaller in aggregate data than at sector level. This is an artifact of aggregation. Estimations performed on aggregate data constrain sector elasticities to homogeneity, which creates a heterogeneity bias. The paper shows such a bias exists in two prominent approaches used to estimate elasticities, which has meaningful consequences for the calibration of the trade elasticity in one-sector, aggregative models. With elasticities calibrated to aggregate data, macroeconomic models can have predictions at odds with the implications of their multi-sector counterparts. They do not when elasticities are calibrated using a weighted average of sector elasticities. (JEL C51, F13, F14, F41, O19)