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The elasticity of trade : estimates and evidence
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Simonovska, Ina and Waugh, Michael E. (2010) The elasticity of trade : estimates and evidence. Working Paper. Coventry: Department of Economics, University of Warwick. CAGE Online Working Paper Series, Volume 2010 (Number 13).
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Text (Working paper)
WRAP_Simonovisha_13.2010_waugh.pdf - Published Version Download (539Kb) | Preview |
Official URL: http://www2.warwick.ac.uk/fac/soc/economics/resear...
Abstract
Quantitative results from a large class of structural gravity models of international trade depend critically on a single parameter governing the elasticity of trade with respect to trade frictions. We provide a new method to estimate this elasticity and illustrate the merits of our approach relative to the estimation strategy of Eaton and Kortum (2002). We employ this method on data for 123 developed and developing countries for the year 2004 using new disaggregate price and trade flow data. Our benchmark estimate for all countries is approximately 4.5, nearly 50 percent lower than the alternative estimation strategy would suggest. This difference implies a doubling of the measured welfare costs of autarky across a large class of widely used trade models.
Item Type: | Working or Discussion Paper (Working Paper) | ||||
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Subjects: | H Social Sciences > HB Economic Theory | ||||
Divisions: | Faculty of Social Sciences > Economics | ||||
Library of Congress Subject Headings (LCSH): | International trade, International trade -- Econometric models, Prices, Free trade -- Economic aspects | ||||
Series Name: | CAGE Online Working Paper Series | ||||
Publisher: | Department of Economics, University of Warwick | ||||
Place of Publication: | Coventry | ||||
Official Date: | June 2010 | ||||
Dates: |
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Volume: | Volume 2010 | ||||
Number: | Number 13 | ||||
Number of Pages: | 39 | ||||
Status: | Not Peer Reviewed | ||||
Publication Status: | Published | ||||
Access rights to Published version: | Open Access | ||||
Funder: | World Bank |
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