The Effect of Aggregation Bias: An NTB‐Modelling Analysis of Turkey's Agro‐Food Trade with the EU

22 Pages Posted: 19 Oct 2017

See all articles by Beyhan Bektasoglu

Beyhan Bektasoglu

University of Hohenheim

Tanja Engelbert

University of Hohenheim

Martina Brockmeier

University of Hohenheim

Date Written: October 2017

Abstract

We explore how different data aggregation levels affect the gravity estimates of non‐tariff barriers (NTBs) in the agro‐food sector, and we examine their related impacts on policy simulations of an expansion to the European Union (EU) that would include Turkey. We calculate two sets of ad valorem equivalents (AVEs) of NTBs using the gravity approach to disaggregated and aggregated Central Product Classification data for 15 Global Trade Analysis Project (GTAP) agro‐food sectors. We find that the AVEs of NTBs vary substantially across products and that using aggregated data primarily results in greater effects of NTBs. In a second step, we incorporate the AVEs of NTBs into the GTAP model to evaluate Turkey's EU membership and conclude that aggregation bias has considerable effects on both the estimation of NTBs and the general equilibrium simulation results. Utilising different data aggregation levels leads to a great variability of trade costs of NTBs and, hence, to misleading trade and welfare effects.

Suggested Citation

Bektasoglu, Beyhan and Engelbert, Tanja and Brockmeier, Martina, The Effect of Aggregation Bias: An NTB‐Modelling Analysis of Turkey's Agro‐Food Trade with the EU (October 2017). The World Economy, Vol. 40, Issue 10, pp. 2255-2276, 2017. Available at SSRN: https://ssrn.com/abstract=3055479 or http://dx.doi.org/10.1111/twec.12444

Beyhan Bektasoglu (Contact Author)

University of Hohenheim ( email )

Fruwirthstr. 48
Stuttgart, 70599
Germany

Tanja Engelbert

University of Hohenheim

Fruwirthstr. 48
Stuttgart, 70599
Germany

Martina Brockmeier

University of Hohenheim ( email )

International Agricultural Trade and Food Security
490B
Stuttgart, 70599
Germany

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