RESEARCH AND ANALYSIS: WORKING PAPERS
Trade Costs in the Global Economy: Measurement, Aggregation and Decomposition
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 signifcant 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.
No: ERSD-2021-2
Authors: Peter H. Egger, Mario Larch, Sergey Nigai and Yoto V. Yotov
Manuscript date: May 2018
Key Words:
Trade costs; Structural gravity; Multi-sector and multi-country models; Heterogeneous firms; Panel data; Measurement; Aggregation; Decomposition.
JEL classification numbers:
C23, C31, F1
back to topDisclaimer
This is a working paper, and hence it represents research in progress. The opinions expressed in this paper are those of its author. They are not intended to represent the positions or opinions of the WTO or its members and are without prejudice to members' rights and obligations under the WTO. Any errors are attributable to the author.
Download paper in pdf format (116 pages, 1,49Mo; opens in a new window)