Estimations of Tariff Equivalents for the Services Sectors
CEPII Working Paper 2011-24
47 Pages Posted: 15 Feb 2012
Date Written: October 25, 2011
Methodological issues arising from the estimation of tariff equivalents of barriers to services trade are very relevant for policy. These equivalents are used extensively to compute welfare gains and resource reallocations associated with partial liberalization of the sector; any measurement errors will strongly affect the estimated gains. Using the Global Trade Analysis Project (GTAP) database, we rely on so called quantity based methods to derive tariff equivalents from a gravity equation estimated at sectoral level for 9 services sectors and 65 countries.
We also estimate trade equations for services using cross section data, and improve on the methodology of Park (2002). We investigate whether relying on cross section rather than panel data leads to differences in the estimated equivalents. Finally, we compare the estimations based on reconstructed and actual data. We conclude that although use of partially reconstructed data (such as GTAP) affects the results, the equivalents obtained are good representations of the magnitude of protection for developing economies.
Keywords: market access, tariffs, trade in services
JEL Classification: F13
Suggested Citation: Suggested Citation