Gravity redux: measuring international trade costs with panel data

Novy, Dennis (2013) Gravity redux: measuring international trade costs with panel data. Economic Inquiry, 51 (1). 101 - 121. ISSN 0095-2583

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Abstract

Barriers to international trade are known to be large but because of 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 between 1970 and 2000, with Mexico and Canada experiencing the biggest reductions.

Item Type:	Article
Official URL:	http://onlinelibrary.wiley.com/journal/10.1111/(IS...
Additional Information:	© 2012 Western Economic Association International
Divisions:	Centre for Economic Performance
Subjects:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HD Industries. Land use. Labor J Political Science > JZ International relations
JEL classification:	F - International Economics > F1 - Trade > F10 - General F - International Economics > F1 - Trade > F15 - Economic Integration
Date Deposited:	01 Sep 2014 14:27
Last Modified:	26 Oct 2025 07:03
Funders:	Economic and Social Research Council, Grant RES-000-22-3112
URI:	http://eprints.lse.ac.uk/id/eprint/59308

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