The determinants of US olive oil imports

We investigate the determinants of US bilateral imports of olive oil and their dynamics from shocks in foreign supplies and changes in US olive oil demand, using an augmented sectoral gravity framework leading to equilibrium bilateral trade flows from olive oil exporters to the US market. The empirical specification uses a panel dataset at the HS-6 disaggregation level and two estimation techniques (PPML and Heckman), that account for zero trade flows, the extensive margin of trade and the potential censored distribution of exports with zero trade flows. We run Reset and HPC tests to qualify our results. On the supply side, exporters’ capacity to export, multilateral trade resistance, and immigrants’ networks into the US are strong determinants of the bilateral trade flows for both aggregate olive oil exports and for virgin olive oil exports, On the consumer side, US GDP, import unit value, and immigrant network effects are robust determinants of bilateral flows as well for aggregate and virgin olive oil trade flows. Migrants’ stock, exporters’ GDP and population, and total exports revenues increase the probability of an exporter entering the US 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 US consumers.