A SYSTEM-WIDE APPROACH FOR ANALYZING THE EFFECT OF EXCHANGE RATES ON FRESH APPLE IMPORT DEMAND

Abstract

This study examines the impact of changes in exchange rate and import market composition on fresh apple import demand using source differentiated import demand functions. We modify the standard Rotterdam model to incorporate exchange rate effects by revisiting Barten's fundamental matrix equation of consumer demand theory and viewing exchange rate as a "sticky" preference variable. The results show that the preference variable had a significant impact on UK but not on Malaysian and Saudi Arabian import demands.International Relations/Trade,