Drivers of Global Trade: A Product-Level Investigation
International Economic Journal, Forthcoming
26 Pages Posted: 13 Jan 2021 Last revised: 11 Sep 2021
Date Written: August 17, 2021
This paper investigates the drivers of global trade at the six-digit product level. The identification is achieved first by estimating the log-linear product-level bilateral trade implications of a model and second by aggregating the fitted estimation results across bilateral countries using Taylor series to obtain global measures in levels for each product. The empirical results suggest that supply-side effects (capturing production or exporting costs in source countries) contribute to changes in global trade more than six times the demand-side effects (capturing economic activity or preferences in destination countries) and more than ten times the effects of bilateral trade costs (capturing bilateral protectionism measures). Several product-level implications follow.
Keywords: Global Trade; Product-Level Analysis; Decomposition
JEL Classification: F14, F60
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