On the effects of non-tariff measures on Brazilian exports

Lucas Ferraz, Marcel Ribeiro and Pedro Monasterio

No 403, Textos para discussão from FGV EESP - Escola de Economia de São Paulo, Fundação Getulio Vargas (Brazil)

Abstract: This article proposes an alternative methodology for estimating the effects of non-tariff measures on trade flows, based on the recent literature on gravity models. A two-stage Heckman selection model is applied to the case of Brazilian exports, where the second stage gravity equation is theoretically grounded on the seminal Melitz model of heterogeneous firms. This extended gravity equation highlights the role played by zero trade flows as well as firm heterogeneity in explaining bilateral trade among countries, two factors usually omitted in traditional gravity specifications found in previous literature. Last, it also proposes a economic rationale for the effects of NTM on trade flows, helping to shed some light on its main operating channels under a rather simple Cournot’s duopolistic competition framework.

Date: 2015-09-10
New Economics Papers: this item is included in nep-int
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Related works:
Journal Article: On the Effects of Non-Tariff Measures on Brazilian Exports (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:fgv:eesptd:403

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