The Effect of Tariffs on Spanish Goods Exports

27 Pages Posted: 1 Jun 2021

Date Written: May 25, 2021

Abstract

This paper investigates the impact of trade protectionism in the form of tariff barriers on Spanish goods exports. The Spanish economy has significantly increased its degree of openness, which improves potential economic growth, but also implies a higher exposure to the protectionist shift in the international environment observed in the last years. With the purpose of assessing exports sensitivity to tariff increases, we obtain a database combining annual tariffs applied to Spanish products over the years 1995-2019 from WITS and bilateral extra-EU Spanish goods exports from Eurostat, with a product disaggregation level at 6 digits. We estimate the effect of tariffs both on exporting probability (i.e. exports extensive margin) through a linear probability model and exports levels (i.e. exports intensive margin) through a gravity equation. The findings of this paper show that higher tariffs reduce exports levels through extensive an intensive margins. A 1% tariff increase reduces on average the probability of exporting to a specific market by nearly 0.08 pp. and exported values by around 1%.

Keywords: protectionism, exports, tariffs

JEL Classification: E43, F41, N10, N30, N40

Suggested Citation

Gutiérrez Chacón, Eduardo and Machuca, César Martín, The Effect of Tariffs on Spanish Goods Exports (May 25, 2021). Banco de Espana Working Paper No. 2121, Available at SSRN: https://ssrn.com/abstract=3852904 or http://dx.doi.org/10.2139/ssrn.3852904

Eduardo Gutiérrez Chacón (Contact Author)

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

César Martín Machuca

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

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