We examine determinants of U.S. olive oil imports and their dynamics in response to foreign supply shocks and changes in U.S. demand. Using an augmented sectoral gravity framework applied to a disaggregated HS-6 level panel dataset, we employ two estimation techniques (PPML and Heckman) that consider zero trade flows and the potential censored distribution of exports.
Our analysis incorporates Reset and HPC tests for result validation. On the supply side, determinants include exporters’ capacity to export, multilateral trade resistance, and immigrants’ networks to the U.S. On the consumer side, robust determinants encompass U.S. GDP, import unit value, and immigrant network effects. Migrants’ stock, exporters’ GDP and population, and total export revenues increase the probability of an exporter entering the U.S. market. Beyond the immigrant network effects, we could not find robust evidence of consumer behavior being influenced by popular press measures of the emergence of Mediterranean diet and olive oil, or measures of cultural globalization of U.S. consumers
