Estimating Armington elasticities for sawnwood and application to the French Forest Sector Model

Domestic and foreign forest products consumptions are considered imperfectly substitutable in the French Forest Sector Model (FFSM). This assumption is justified by product heterogeneities that depend on production places, by the consumers habits or by the market structure. It leads us to implement the international trade in the FFSM via the Armington's theory of the demand for products distinguished by place of production. In this paper we propose a calibration of Armington's elasticities of substitution between French and foreign forest products. System-GMM estimators are applied to identify robust parameters using a panel data from France customs service.

► Armington's theory is used to describe international trade in the French Forest Sector Model. ► We use GMM estimators to assess the value of substitution elasticities for sawnwood.