Which factors determine the prices of West German expörts and imports? To answer this question, two single equation error correction modeis are applied. Export prices turn out to be mainly determined by prices for concurrent goods proiduced abroad, whereas unit labor costs and the nominal exchange-rate of the D-Mark only have minor impacts on export prices. Import prices are significantly influenced by producer prices abroad, domestic prices for import substitutes, the nominal exchange-rate of the D-Mark and to a smaller degree by commodity prices. The modeis are fmally used to simulate the reaction of export and import prices to changes of the exogenous variables.
International Trade Time-Series Models Simulations