Estimation of Armington Elasticities: An Application to the Philippines

The elasticities of substitution between imported and domestically produced goods -
Armington elasticities - are estimated in this paper for the Philippines. The estimated
elasticities are intended for use in a large, empirically based computable general
equilibrium model of the Philippine economy. Armington elasticities are known to be
important for the properties of these models but are seldom estimated empirically.
The results of this paper suggest that estimation is possible for developing countries,
like the Philippines, for which economic data are generally considered poor, provided
appropriate account is taken of the dynamic properties of the data