| Sumario: | The article presents authors' reply on the change in the U.S. import demand function between 1950 and 1960. Economists Peter Hooper's main criticism of authors' work centers about the collinearity between trend and income variables. Hooper feels that the trend variable has picked-up much of the income effect-leading to less instability in the import demand function than appear to indicate. There are, certainly, numerous factors such as taste changes, increasing awareness of foreign goods, the development of franchises for foreign goods, etc., that seem important, but that are not readily included in the equations except via a trend variable. Hooper also offers some more specific suggestions, such as moving income to the left-hand side of the equation and adding specific variables, such as foreign capacity utilization, for which the trend that had acted as a proxy. Preliminary work did test the feasibility of placing income on the left-hand side of the equation and estimating its elasticity a priori, but the results were not satisfactory. Foreign capacity utilization seems intriguing, although it was found that domestic capacity utilization to be nowhere significant.
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