Gravity and Heterogeneous Trade Cost Elasticities

• 成果类型: Article
• 署名作者: Chen, Natalie; Novy, Dennis
• 署名单位: University of Warwick; Leibniz Association; Ifo Institut; Center for Economic & Policy Research (CEPR); University of London; London School Economics & Political Science
• 刊物名称: ECONOMIC JOURNAL
• ISSN/ISSBN: 0013-0133
• DOI: 10.1093/ej/ueab067
• 发表日期: 2022
• 页码: 1349-1377
• 关键词: currency unions; INTERNATIONAL-TRADE; common currencies; one market; one money; euro; models; EMU; members

摘要

How do trade costs affect international trade? This paper offers a new approach. We rely on a flexible gravity equation that predicts variable trade cost elasticities, both across and within country pairs. We apply this framework to popular trade cost variables such as currency unions, trade agreements and World Trade Organization membership. While we estimate that these variables are associated with increased bilateral trade on average, we find substantial heterogeneity. Consistent with the predictions of our framework, trade cost effects are strong for 'thin' bilateral relationships characterised by small import shares, and weak or even zero for 'thick' relationships.