Import Price Uncertainty, Production Decisions, and Relative Factor Shares

In this paper, we estimate the effects of import-price uncertainty on factor income in Switzerland. We use the production-theory approach to derive the import demand function from an expected utility maximization problem, treating imports as an input to the technology. The model is also used to test for risk aversion and to assess the impact of uncertainty on the volume of imports and gross output. We find evidence that, for most years, labor has been relatively more vulnerable to uncertainty than capital