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Measuring Trade Costs From Relative Prices: The Role Of Location And Goods Characteristics

Author

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  • IN HUH

    (School of Economics, Chonnam National University, 77 Yongbong-ro, Buk-gu, Gwangju, Republic of Korea 500-757, Republic of Korea)

  • INKOO LEE

    (Department of International Trade, Soongsil University, 369 Sangdo-ro, Dongjak-gu Seoul, Republic of Korea 156-743, Republic of Korea)

Abstract

This paper estimates the trade costs from international relative prices, and studies the economic determinants of implied trade costs. We find that the magnitude of trade costs depends on the characteristics of both the type of good and set of locations under examination. In particular, it is found that higher non-traded input share and trade barriers, and lower tradability of goods lead to a larger trade cost, as does a lower proximity of geographic distance between locations.

Suggested Citation

  • In Huh & Inkoo Lee, 2014. "Measuring Trade Costs From Relative Prices: The Role Of Location And Goods Characteristics," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 59(05), pages 1-10.
    • Handle: RePEc:wsi:serxxx:v:59:y:2014:i:05:n:s0217590814500416
    DOI: 10.1142/S0217590814500416
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    References listed on IDEAS

    as
    1. James E. Anderson & Eric van Wincoop, 2004. "Trade Costs," Journal of Economic Literature, American Economic Association, vol. 42(3), pages 691-751, September.
    2. Obstfeld, Maurice & Taylor, Alan M., 1997. "Nonlinear Aspects of Goods-Market Arbitrage and Adjustment: Heckscher's Commodity Points Revisited," Journal of the Japanese and International Economies, Elsevier, vol. 11(4), pages 441-479, December.
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    More about this item

    Keywords

    Trade costs; threshold autoregressive; non-traded input; trade share; real exchange rates; F30; C20;
    All these keywords.

    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General

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