Revisiting Time as a Trade Barrier: Evidence from a Panel Structural Gravity Model

32 Pages Posted: 21 Feb 2019

See all articles by Harald Oberhofer

Harald Oberhofer

Vienna University of Economics and Business - Department of Economics; Austrian Institute of Economic Research (WIFO)

Michael Pfaffermayr

University of Innsbruck - Department of Economics; Austrian Institute of Economic Research

Richard Sellner

Institute for Advanced Studies (IHS)

Date Written: 2018

Abstract

In this paper we revisit the evidence on the effects of time spent on border-crossing procedures for international trade using a theory-consistent structural gravity model. We exploit a rich panel data set including domestic trade flows and employ a recent econometric estimator that exhibits favorable asymptotic properties. The results indicate a significant negative effect of the time required for border procedures that is driven by the time needed for document preparation. We find that an additional day spent on those procedures corresponds to an ad valorem tariff equivalent of 0.82 percentage points. The parameters of our structural model are used to simulate three counterfactual scenarios, quantifying the effect of past and potential future trade facilitation efforts for middle, low and high income countries. Full endowment general equilibrium effects suggest that lower and middle income countries benefit most in all scenarios in terms of trade and welfare. In times of stagnating multilateral and bilateral trade liberalization efforts, unilateral implementation of trade facilitation carries the potential to induce an alternative stimulus for trade and welfare, especially for low and middle income countries.

Keywords: structural gravity model, trade facilitation, counterfactual analysis, time to export and import, middle and low income countries

JEL Classification: C310, F100, F130

Suggested Citation

Oberhofer, Harald and Pfaffermayr, Michael and Sellner, Richard, Revisiting Time as a Trade Barrier: Evidence from a Panel Structural Gravity Model (2018). CESifo Working Paper No. 7426, Available at SSRN: https://ssrn.com/abstract=3338780

Harald Oberhofer (Contact Author)

Vienna University of Economics and Business - Department of Economics ( email )

Welthandelsplatz 1
A-1020 Vienna
Austria

Austrian Institute of Economic Research (WIFO) ( email )

P.O. Box 91
Wien, A-1103
Austria

Michael Pfaffermayr

University of Innsbruck - Department of Economics ( email )

Universitaetsstrasse 15
A-6020, Innsbruck
Austria
+43 512 507 7359 (Phone)

HOME PAGE: http://homepage.uibk.ac.at/~c43236/

Austrian Institute of Economic Research ( email )

P.O. Box 91
Wien, A-1103
Austria
+43 1 798 26 01-253 (Phone)
+43 1 798 93 86 (Fax)

HOME PAGE: http://www.wifo.ac.at/Michael.Pfaffermayr/

Richard Sellner

Institute for Advanced Studies (IHS)

Josefstädter Straße 39
A-1080 Vienna
Austria

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