Abstract

http://ssrn.com/abstract=944421
 
 

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Is the Iceberg Melting Less Quickly? International Trade Costs after World War II


Dennis Novy


University of Warwick; Centre for Economic Policy Research (CEPR); Centre for Economic Performance (CEP); CESifo (Center for Economic Studies and Ifo Institute)

October 2006

Warwick Economic Research Paper No. 764

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 'iceberg' 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-World War 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.

Number of Pages in PDF File: 39

Keywords: Trade Costs, Gravity, Distance, Economic Integration

JEL Classification: F1, F4

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Date posted: November 14, 2006  

Suggested Citation

Novy, Dennis, Is the Iceberg Melting Less Quickly? International Trade Costs after World War II (October 2006). Warwick Economic Research Paper No. 764. Available at SSRN: http://ssrn.com/abstract=944421 or http://dx.doi.org/10.2139/ssrn.944421

Contact Information

Dennis Novy (Contact Author)
University of Warwick ( email )
Department of Economics
Coventry CV4 7AL
United Kingdom
+44 (0) 2476150046 (Phone)
HOME PAGE: http://www2.warwick.ac.uk/fac/soc/economics/staff/faculty/novy/
Centre for Economic Policy Research (CEPR) ( email )
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Centre for Economic Performance (CEP) ( email )
Houghton Street
London WC2A 2AE
United Kingdom
CESifo (Center for Economic Studies and Ifo Institute)
Poschinger Str. 5
Munich, DE-81679
Germany
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