A Structural Quantitative Analysis of Services Trade De-Liberalization

46 Pages Posted: 26 Dec 2018 Last revised: 21 Feb 2019

See all articles by Sven Blank

Sven Blank

Deutsche Bundesbank - Research Centre

Peter H. Egger

Ifo Institute for Economic Research - International Trade and Foreign Direct Investment; Ludwig-Maximilians University of Munich; CESifo (Center for Economic Studies and Ifo Institute for Economic Research

Valeria Merlo

University of Tuebingen

Georg Wamser

University of Tuebingen; ETH Zurich

Date Written: 2018

Abstract

This paper suggests a quantifiable multi-sector-multi-country economic model of goods and services production and consumption. It calibrates overall (variable and fixed) costs to market-specific sales by sector and decomposes these costs into observable and unobservable components. In an empirical analysis based on census-type data on firm-sector-country sales of German services sellers as well as sector-country-by-sector-country input-output matrices for various economies and sectors, the paper provides the following insights. The overall (variable and fixed) costs on seller-to-customer-market transactions in services have quite a high distance equivalent and are reduced substantially by preferential market access for services through trade agreements. If all countries considered abandoning existing preferential market access to services, this would reduce their real consumption by up to 7.7 percent with a similar decline in real wages and real dividends (depending on the country). If one country alone abandoned its preferential services market access reciprocally with its partners, the effect would be smaller. However, it would still involve a decline of real consumption of 0.3 percent for a country as large (and as remote relative to continental Europe) as the United Kingdom. For most economies, depending on their input-output structure, de-liberalizing preferential services-market access would have adverse spillover effects on manufacturing (in terms of real wages as well as dividends).

Keywords: Services trade, De-liberalization, Structural estimation, Counterfactual analysis

JEL Classification: F12, F14, F15, F17, L11, L25

Suggested Citation

Blank, Sven and Egger, Peter H. and Merlo, Valeria and Wamser, Georg, A Structural Quantitative Analysis of Services Trade De-Liberalization (2018). Deutsche Bundesbank Discussion Paper No. 47/2018. Available at SSRN: https://ssrn.com/abstract=3305816

Sven Blank (Contact Author)

Deutsche Bundesbank - Research Centre ( email )

Wilhelm-Epstein-Str. 14
D-60431 Frankfurt/Main
Germany

Peter H. Egger

Ifo Institute for Economic Research - International Trade and Foreign Direct Investment ( email )

Poschingerstr. 5
Munich, DE-81679
Germany
+49 0 89 9224 1238 (Phone)
+49 0 89 985369 (Fax)

HOME PAGE: http://www.cesifo-group.de/portal/page?_pageid=36,425628&_dad=portal&_schema=PORTAL

Ludwig-Maximilians University of Munich

Schackstr. 4
Munich, 80539
Germany

CESifo (Center for Economic Studies and Ifo Institute for Economic Research

Poschinger Str. 5
Munich, DE-81679
Germany

Valeria Merlo

University of Tuebingen ( email )

Department of Economics
Nauklerstr. 47
Tübingen, 72074
Germany

Georg Wamser

University of Tuebingen ( email )

Wilhelmstr. 19
72074 Tuebingen, Baden Wuerttemberg 72074
Germany

ETH Zurich ( email )

Weinbergstr. 35
Zurich, 8003
Switzerland

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