Novy, Dennis (2009) Gravity redux: measuring international trade costs with panel data. Working Paper. Coventry: University of Warwick, Department of Economics. (Warwick economic research papers.

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Abstract

Barriers to international trade are known to be large. But have they become smaller over time? Building on the gravity framework by Anderson and van Wincoop (2003), I derive an analytical solution for time-varying multilateral resistance variables that can be related to observable trade data. This solution makes it possible to infer time-varying bilateral trade costs directly from the model.s gravity equation without imposing arbitrary trade cost functions. As an illustration, I show that U.S. trade costs with major trading partners declined on average by about 40 percent between 1970 and 2000, with Mexico and Canada experiencing the biggest reductions.

Item Type:	Working or Discussion Paper (Working Paper)
Subjects:	H Social Sciences > HF Commerce
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	International trade, Panel analysis, Costs, Industrial, United States -- Foreign economic relations -- Mexico, Mexico -- Foreign economic relations -- United States
Series Name:	Warwick economic research papers
Publisher:	University of Warwick, Department of Economics
Place of Publication:	Coventry
Date:	July 2009
Number:	No.861
Number of Pages:	27
Status:	Not Peer Reviewed
Access rights to Published version:	Open Access
Description:	Originally published November 2008, this version updated July 2009.
Funder:	Economic and Social Research Council (Great Britain) (ESRC)
Grant number:	RES-000-22-3112 (ESRC)
Related URLs:	http://www2.warwick.ac.uk/fac/soc/econom... Related item in WRAP
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URI:	http://wrap.warwick.ac.uk/id/eprint/1355

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