A Structural Analysis for Forecasting Korea's Export Quantity
Sang-Ho Lee, Soo-Sup Song · RePEc: Research Papers in Economics · 1999
Export functions have been empirically estimated by many researchers in order to measure price and income elasticities, which are then used in forming various economic policy measures. However, since the model specification of these researches has not included the exchange risk variable, the estimation results can not be said to represent the real behavioral pattern of exporters. This paper tries to rectify this inappropriateness by explicitly including the exchange risk variable in the estimation process. Estimation result shows that exchange risk affects Korea's export quantity significantly along with those variables such as export unit prices, importing country's income level, etc. In addition, the short-run model with error correction term provided more accurate forecast for the Korean export quantity than the long-run equilibrium model.