Estimating the Effects of Non-discriminatory Trade Policies within Structural Gravity Models

Arbeitspapier

We propose a simple method to identify the effects of unilateral and non-discriminatory trade policies on bilateral trade within a theoretically-consistent empirical gravity model. Specifi-cally, we argue that structural gravity estimations should be performed with data that include not only international trade flows but also intra-national trade flows. The use of intra-national sales allows identification of the effects of non-discriminatory trade policies on the importer side (e.g. most favored nation tariffs) and on the exporter side (e.g. export subsidies), even in the presence of exporter and importer fixed effects. An important byproduct of our approach is that it can be used to recover estimates of the export-supply elasticity and of the import-demand elasticity. We demonstrate the effectiveness of our techniques in the case of MFN tariffs and “Time to Export” as representative determinants of trade on the importer and on the exporter side, respectively. Our methods can be extended to quantify the impact on trade of any country-specific characteristics as well as any non-trade policies.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 6735

Classification and Topics

• Classification: Wirtschaft ; Trade: General ; Trade Policy; International Trade Organizations ; Empirical Studies of Trade ; Macroeconomic Aspects of International Trade and Finance: Forecasting and Simulation: Models and Applications
• Subject: gravity model ; non-discriminatory trade policies ; tariffs ; subsidies ; time to export ; trade elasticity of substitution

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Heid, Benedikt ; Larch, Mario ; Yotov, Yoto V.
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2017

Further information

• Handle: http://hdl.handle.net/10419/173011
• Last update: 10.03.2025, 11:42 AM CET