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On the measurement of trade costs : direct vs. indirect approaches to quantifying standards and technical regulations
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Chen, Natalie and Novy, Dennis (2012) On the measurement of trade costs : direct vs. indirect approaches to quantifying standards and technical regulations. World Trade Review, Volume 11 (Number 3). pp. 401-414. doi:10.1017/S1474745612000183 ISSN 1474-7456.
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Official URL: http://dx.doi.org/10.1017/S1474745612000183
Abstract
In this article, we review the literature on the measurement of trade costs in international trade with a special emphasis on non-tariff measures and in particular on standards and technical regulations. We distinguish ‘direct’ from ‘indirect’ approaches. The direct approach collects observable data or proxy variables on trade cost components which are then typically used as regressors in a gravity equation of trade. Instead, the indirect approach infers the extent of trade impediments from trade flows. It compares actual trade flows to the trade flows predicted by a hypothetical frictionless benchmark scenario based on a micro-founded trade model, attributing the deviation of actual from predicted trade flows to trade frictions. We argue that economists and policy-makers can gain useful insights from both approaches.
Item Type: | Journal Article | ||||
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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 | ||||
Journal or Publication Title: | World Trade Review | ||||
Publisher: | Cambridge University Press | ||||
ISSN: | 1474-7456 | ||||
Official Date: | July 2012 | ||||
Dates: |
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Volume: | Volume 11 | ||||
Number: | Number 3 | ||||
Page Range: | pp. 401-414 | ||||
DOI: | 10.1017/S1474745612000183 | ||||
Status: | Peer Reviewed | ||||
Publication Status: | Published | ||||
Access rights to Published version: | Restricted or Subscription Access | ||||
Date of first compliant deposit: | 24 December 2015 | ||||
Date of first compliant Open Access: | 24 December 2015 |
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