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Trade costs in the global economy: Measurement, aggregation and decomposition

Author

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  • Egger, Peter
  • Larch, Mario
  • Nigai, Sergey
  • Yotov, Yoto

Abstract

Proper measurement and aggregation of trade costs is of paramount importance for sound academic and policy analysis of the determinants - particularly those of policy - of economic outcomes. The international trade profession has witnessed significant new developments, both on the theoretical and on the empirical side, concerning the measurement and decomposition of such costs into variable and fixed costs on the one hand and into partial and general equilibrium effects on the other hand. The objectives and main contributions of this project are to offer guidance for proper measurement, aggregation, and decomposition of trade costs into fixed vs. variable and partial vs. general equilibrium costs across two broad dimensions, one including overall trade costs vs. policy measures vs. transportation costs vs. natural trade barriers vs. uncertainty and another one including geography vs. product vs. household income level vs. agent.

Suggested Citation

  • Egger, Peter & Larch, Mario & Nigai, Sergey & Yotov, Yoto, 2021. "Trade costs in the global economy: Measurement, aggregation and decomposition," WTO Staff Working Papers ERSD-2021-2, World Trade Organization (WTO), Economic Research and Statistics Division.
    • Handle: RePEc:zbw:wtowps:ersd20212
    DOI: 10.30875/e6c4c0b1-en
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    References listed on IDEAS

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    Cited by:

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    2. Benz, Sebastian & Jaax, Alexander, 2022. "The costs of regulatory barriers to trade in services: New estimates of ad valorem tariff equivalents," Economics Letters, Elsevier, vol. 212(C).
    3. Campos, Rodolfo G. & Estefania-Flores, Julia & Furceri, Davide & Timini, Jacopo, 2023. "Geopolitical fragmentation and trade," Journal of Comparative Economics, Elsevier, vol. 51(4), pages 1289-1315.
    4. Camille Reverdy, 2023. "Estimating the general equilibrium effects of services trade liberalization," Review of International Economics, Wiley Blackwell, vol. 31(2), pages 493-521, May.
    5. Ben Shepherd, 2021. "Facilitating Trade in Pharmaceuticals: A Response to the COVID-19 Pandemic," Working Papers DP-2021-05, Economic Research Institute for ASEAN and East Asia (ERIA).
    6. Mario Larch & Jeff Luckstead & Yoto V. Yotov, 2021. "Economic Sanctions and Agricultural Trade," CESifo Working Paper Series 9410, CESifo.
    7. Lukman OYELAMI & Amara ZONGO, 2022. "Modeling the Impact of Non-Tariff Barriers in Services on Intra-African Trade: Global Trade Analysis Project Model," Bordeaux Economics Working Papers 2022-08, Bordeaux School of Economics (BSE).
    8. Federico Carril-Caccia & Ana Cuadros & Jordi Paniagua, 2024. "Mind the gaps: Gender complementarities in migration and FDI," Working Papers 2402, Department of Applied Economics II, Universidad de Valencia.

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    More about this item

    Keywords

    Trade costs; Structural gravity; Multi-sector and multi-country models; Heterogeneous firms; Panel data; Measurement; Aggregation; Decomposition;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • F1 - International Economics - - Trade

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