Changes in the Size of the Traded Goods Sector: Theory and Applications.

This paper first presents price-quantity data for traded and nontraded goods in the U.S. and Australia. In the U.S. from the early 1950s to the early 1970s, the relative size of the traded goods sector (as measured by its share in total expenditure) fell by 10 per cent; in Australia over roughly the same period it fell by 36 per cent. This decline is analysed with a consumer demand model, which enables us to decompose the change in the size of this sector into a number of components for each year. The fall in the relative price of traded goods accounts for a substantial part of the decline in this sector in both countries. In addition, changes in tastes away from traded goods is an important factor for Australia. [ABSTRACT FROM AUTHOR]