Source-differentiated analysis of exchange rate effects on US beef imports
The non-linear Inverse Almost Ideal Demand System is used in estimating the impact of exchange rates on source-differentiated import demand for beef in the USA. We estimate scale, own and cross-price flexibilities for six major beef suppliers and the rest of the world, incorporating exchange rates exogenously. Results indicate that beef imports from Canada and ROW were own-price flexible but, the remaining countries – Argentina, Brazil, Uruguay, Australia and New Zealand were own-price inflexible. Though exchange rate pass-through differs among sources, nearly all of the exporting countries had a near complete exchange rate pass-through. All own exchange-rate effects are negative and significant, except beef imported from Uruguay while nearly all cross exchange-rate effects are insignificant.