A Gravity approach to evaluate the significance of trade liberalization in vertically-related goods in the presence of non-tariff barriers

Pascal L. Ghazalian, Lota Dabio Tamini (), Bruno Larue and Jean-Philippe Gervais ()

MPRA Paper from University Library of Munich, Germany

Abstract: A gravity-based model is developed to explain bilateral trade flows in primary and processed agri-food commodities. It innovates by explicitly accounting for the vertical production linkages between primary and processed agri-food products, tariffs, and subsidies and by estimating the restrictiveness of non-tariff barriers in the upstream sector. Our application focuses on cattle/beef trade flows between forty-two countries. The structural parameters of the model are used to simulate trade flows under various scenarios of import tariffs and domestic and export subsidies reductions. The United States and Australia emerge as the exporting countries that stand to benefit the most from cuts in tariffs and subsidies as bovine meat imports in the European Union and Japan significantly increase. A bootstrap procedure is used to generate confidence intervals around predicted trade liberalization outcomes.

Keywords: Gravity model; cattle/beef trade (search for similar items in EconPapers)
JEL-codes: Q17 F13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr and nep-int
Date: 2007-04-01
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Persistent link: http://EconPapers.repec.org/RePEc:pra:mprapa:2744

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