Trade, Product Variety and Welfare: A Quantitative Assessment for the Transition Economies in Central and Eastern Europe
University of Hamburg - Department of Economics and Business Administration; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)
University of Hamburg
December 30, 2003
BOFIT Discussion Paper No. 17/2003
We calculate welfare gains of trade liberalization in the Central and East European transition economies, following the approach of Romer (1994), who emphasized that proper modeling of the impact of trade restrictions on the number of available product varieties is crucial to quantifying the welfare impact of trade liberalization. The empirical work relies on direct measures of product variety calculated from 5-digit trade data. Although the issue is far from settled, the emerging conclusion is that freer trade has boosted welfare.
Number of Pages in PDF File: 24
Keywords: trade liberalization, product variety, welfare, transition economies
JEL Classification: D60, F14, F15working papers series
Date posted: September 19, 2007
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