Heterogeneous Effects of Tariff and Non-Tariff Trade-Policy Barriers in Quantitative General Equilibrium

57 Pages Posted: 27 Mar 2019

See all articles by Peter H. Egger

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

Katharina Erhardt

ETH Zürich - KOF Swiss Economic Institute

Date Written: March 2019

Abstract

Structural quantitative work in international economics typically treats trade policy as log-linearly related to trade costs and as exogenous. This paper proposes a structural approach that allows for a non-parametric relationship and treats tariff and non-tariff trade-policy variables as potentially endogenous in log-linear estimation. We document that the data reject the assumption of log-linearity of trade costs in both the tariff- and the non-tariff-policy domains. Specifically, the partial impact of a change in tariffs is strongest for low policy barriers and medium levels of tariffs but generally decreases in the level of both non-tariff barriers and tariff barriers. To give a relevant illustration, we assess the effects of a unilateral increase of US tariffs on Chinese imports by 10 percentage points and document that the estimated effects on real bilateral trade-flow changes would be largely underestimated by standard approaches.

Keywords: Generalized propensity scores, Gravity models, Non-parametric methods, Semi-parametric methods, trade policy

JEL Classification: C14, F13, F14

Suggested Citation

Egger, Peter H. and Erhardt, Katharina, Heterogeneous Effects of Tariff and Non-Tariff Trade-Policy Barriers in Quantitative General Equilibrium (March 2019). CEPR Discussion Paper No. DP13602, Available at SSRN: https://ssrn.com/abstract=3360069

Peter H. Egger (Contact Author)

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

Katharina Erhardt

ETH Zürich - KOF Swiss Economic Institute ( email )

Zurich
Switzerland

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
0
Abstract Views
343
PlumX Metrics