Gravity and Heterogeneous Trade Cost Elasticities
Bibliographic Data
| ID | 9949685 |
|---|---|
| Authors | Natalie Chen (0000-0002-8961-6244, University of Warwick, UK, CAGE, UK, CESifo, Germany & CEPR, UK, corresponding author), Dennis Novy (University of Warwick, UK, CAGE, UK, CEP/LSE, UK, CESifo, Germany & CEPR, UK) |
| Year | 2021 |
| Volume | 132 |
| Issue | 644 |
| Pages | 1349-1377 |
| Publication date | 2021-09-04 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | The Economic Journal (JOURNAL) |
| Journal identifiers | ISSN: 0013-0133 • E-ISSN: 1468-0297 |
| Publisher | Oxford University Press (OUP) (PUBLISHER) |
| DOI | 10.1093/ej/ueab067 |
| OpenAlex | W3196883800 |
| Language | EN |
| Citations received | 5 |
| References cited | 57 |
How do trade costs affect international trade? This paper offers a new approach. We rely on a flexible gravity equation that predicts variable trade cost elasticities, both across and within country pairs. We apply this framework to popular trade cost variables such as currency unions, trade agreements and World Trade Organization membership. While we estimate that these variables are associated with increased bilateral trade on average, we find substantial heterogeneity. Consistent with the predictions of our framework, trade cost effects are strong for ‘thin’ bilateral relationships characterised by small import shares, and weak or even zero for ‘thick’ relationships
Bilateral trade · Currency · Econometrics · Economic integration · Economics · Geography · Gravity equation · Gravity model of trade · International economics · International trade · Microeconomics · Monetary economics · Trade barrier · Variable (mathematics · Variable cost · Economic Policies and Impacts · Global Financial Crisis and Policies · Global trade and economics · Mathematics
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| Citations per year | 1.67 |
|---|---|
| Citation span | 2023 - 2026 (4) |
| Highly cited | No |