Novy, Dennis (2008) Gravity redux : measuring international trade costs with panel data. In: The Changing Global Economy Conference, Department of Economic, University of Western Ontario, 25 Apr 2008 (Unpublished)

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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 and observable multilateral resistance variables. This solution gives rise to a micro-founded gravity equation from which bilateral trade costs can be directly inferred. This approach is easy to implement and obviates the need to impose 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:	Conference Item (Paper)
Subjects:	H Social Sciences > HB Economic Theory
Divisions:	Faculty of Social Sciences > Economics
Date:	25 April 2008
Status:	Not Peer Reviewed
Publication Status:	Unpublished
Conference Paper Type:	Paper
Title of Event:	The Changing Global Economy Conference
Type of Event:	Conference
Location of Event:	Department of Economic, University of Western Ontario
Date(s) of Event:	25 Apr 2008
Related URLs:	Organisation
URI:	http://wrap.warwick.ac.uk/id/eprint/44823

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