![]() Since, for the purpose of its study, the Tariff Commission assumed that the tariff changes would be universal and permanent, the estimates for each commodity were necessarily made after taking into account the effect upon that commodity of any changes in the prices of other commodities resulting from the universal changes in tariffs. If, however, technical, industrial, or other changes were known to have affected materially the competitive positions of particular foreign and domestic commodities, the changes were taken into account in the estimations. The relations between general price and cost levels in the different countries of the world during 1951-55 were assumed to be about the same as in 1939. prices for the commodities selected were in most cases assumed to be approximately 13 per cent higher than in 1939, although in certain cases a deviation from this assumption was accepted as necessary. The estimates prepared by these experts were made under the assumption that normal conditions would be returning during 1951-55, and that the per capita money income of the United States would then be 75 per cent higher than in 1939. The Tariff Commission assigned each commodity or each group of related commodities to an expert familiar with the characteristics of its demand and supply. imports which might be expected to follow a 50 per cent reduction or a 50 per cent increase in the duties imposed on some 450 commodities, the 1939 or expected postwar imports of each of which exceeded $100,000. Tariff Commission was asked to estimate for the long-run postwar period the effects on the quantity and value of U.S. consumption of the commodity which is supplied by imports. The magnitude of the price elasticity of import demand for a commodity appears also to be inversely related to the percentage share of total U.S. The average elasticity of demand for manufactured and semimanufactured commodities imported into the United States from a number of industrial countries tends to be higher than the average of approximately 2.5 for all the 176 commodities considered in this paper while the elasticities for a number of raw material imports are, in general, below this average. The average of these elasticities was approximately 2.5, which is significantly higher than the estimates made by several writers who have used correlation techniques. ![]() The estimates of the price elasticity of demand for 176 individual commodities imported into the United States, derived from the Tariff Commission study by the method described below, varied greatly for the different commodities. Furthermore, even if prices, income, and the tariff had been as assumed by the Tariff Commission, the actual figures would not test the reliability of the estimates, since changes have also occurred in many other factors, which have affected the demand for imports. Both income and prices rose by far more than the Tariff Commission assumed, and the 1939 tariff was itself changed, in a manner different from that assumed in the Tariff Commission study. While the Tariff Commission’s estimates were made in 1945 and were based on the expected long-run effects under conditions expected to prevail during 1951-55, their reasonableness cannot be fairly judged by comparing the estimates for values of imports with the figures actually recorded in these years. The elasticity estimates are, in effect, a translation of the Tariff Commission estimates into a different language, and no independent validity can be claimed for them. The reliability of the estimates of elasticity is, of course, completely dependent upon the reasonableness of the Tariff Commission’s estimates. imports of individual commodities, provide a large volume of material for calculating estimates of the price elasticities of demand for the most important dutiable commodities imported into the United States. tariff rates on the postwar volume and value of U.S. Tariff Commission, 2 of the effects of a 50 per cent reduction and of a 50 per cent increase in the 1939 U.S. The estimates prepared in 1945 by the U.S. 1 An alternative method of approach, which may be of particular significance, is to determine elasticities from the long-run effects to be expected from tariff changes, based on a study of the characteristics of demand and supply in the markets of individual commodities. The application of these techniques is subject to a number of disadvantages. THE ESTIMATES of price elasticities in international trade which have so far been published have been derived mostly by applying correlation techniques.
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