Novy, Dennis (2006) Is the iceberg melting less quickly? International trade costs after World War II. Working Paper. University of Warwick, Department of Economics, Coventry.

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Abstract

International trade costs are of vital importance because they determine trade patterns and therefore economic performance. This paper develops a new micro-founded measure of international trade costs. It is based on a multi-country general equilibrium model of trade that incorporates bilateral "ice-berg" trade costs. The model results in a gravity equation from which the implied trade costs can be easily computed. The trade cost measure is intuitive, takes multilateral resistance into account and yields empirical results that are economically sensible. It is found that during the post-WorldWar II period trade costs have declined markedly. The dispersion of trade costs across countries can best be explained by geographical and historical factors like distance and colonial linkages but also by tariffs and free trade agreements.

Item Type:	Working or Discussion Paper (Working Paper)
Alternative Title:	Is the iceberg melting less quickly? International trade costs after World War Two
Subjects:	H Social Sciences > HF Commerce
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	International trade -- Taxation, Economic integration, Economic development, International economic relations -- History -- 20th century, Econometric models
Series Name:	Warwick economic research papers
Publisher:	University of Warwick, Department of Economics
Place of Publication:	Coventry
Date:	10 July 2006
Number:	No.764
Number of Pages:	39
Status:	Not Peer Reviewed
Access rights to Published version:	Open Access
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URI:	http://wrap.warwick.ac.uk/id/eprint/1436

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