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Two Essays on U.S. Imports of Olive Oil

A. Malek Hammami, University of Nebraska - Lincoln

Abstract

The first essay investigates the welfare and trade impacts of U.S. retaliatory tariffs from the Airbus WTO dispute on EU olive oil, using a multi-market partial-equilibrium displacement model calibrated on recent market data. U.S. retailer-blenders source olive oil in eight foreign markets and domestically and for two qualities of oil (virgin, other), and in two shipping container types (non-bulk, bulk). We consider two main scenarios: A 100% tariff on all EU olive oils as initially announced by the USTR, and the actual and final 25% tariff on non-bulk Spanish olive oil. The first scenario leads to significant loss of welfare for U.S. consumers of $924 million, much reduced EU olive oil exports to the United States ($360 million), and increased imports from non-EU sources ($90 million). The second scenario has much more muted effects, with mitigated welfare losses for U.S. consumers ($55 million), strong decreases of Spanish olive oil exports shipped in smaller containers, much larger exports of bulk Spanish olive oil and other olive oils. The essay discusses the political economy of the contrasting initial announcement and limited implemented retaliation. The second essay is a comprehensive investigation of the determinants of U.S. bilateral imports of olive oil and their dynamics from shocks in foreign supplies and changes in U.S. olive oil demand, using an augmented gravity framework that leads to an equilibrium of bilateral trade flows from olive oil exporters to the U.S. market. The empirical specification is applied at the disaggregated HS-6 level in a panel dataset, and a series of estimation techniques, which account for zero trade flows, the extensive margin of trade and the censored distribution of exports with zero trade flows. Reset and HPC tests suggest that the Heckman sample selection fits the data better than PPML. At the extensive margin, we find that the migrants’ stock, exporters’ GDP and population, and total exports revenue are factors influencing the probability to enter the US market.

Subject Area

Agricultural economics|Economics

Recommended Citation

Hammami, A. Malek, "Two Essays on U.S. Imports of Olive Oil" (2021). ETD collection for University of Nebraska-Lincoln. AAI28720593.
https://digitalcommons.unl.edu/dissertations/AAI28720593

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