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Gravity redux: measuring international trade costs with panel data

Novy, Dennis (2012) Gravity redux: measuring international trade costs with panel data. CEP Discussion Papers (CEPDP1114). London School of Economics and Political Science. Centre for Economic Performance, London, UK.

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Abstract

Barriers to international trade are known to be large but due to data limitations it is hard to measure them directly for a large number of countries over many years. To address this problem I derive a micro-founded measure of bilateral trade costs that indirectly infers trade frictions from observable trade data. I show that this trade cost measure is consistent with a broad range of leading trade theories including Ricardian and heterogeneous firms models. In an application I show that U.S. trade costs with major trading partners declined on average by about 40 percent between 1970 and 2000, with Mexico and Canada experiencing the biggest reductions.

Item Type: Monograph (Discussion Paper)
Official URL: https://cep.lse.ac.uk/_new/publications/discussion...
Additional Information: © 2012 The Author(s)
Divisions: Centre for Economic Performance
Subjects: H Social Sciences > HC Economic History and Conditions
JEL classification: F - International Economics > F1 - Trade > F10 - General
F - International Economics > F1 - Trade > F15 - Economic Integration
Date Deposited: 22 Feb 2024 12:48
Last Modified: 22 Feb 2024 12:48
URI: http://eprints.lse.ac.uk/id/eprint/121749

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