 Cutting red tape for trade in servicesMilena Kern, Jörg Paetzold and Hannes Winner The World Economy, 2021, vol. 44, issue 10, 2858-2886 Abstract: Trade in services is often hampered by domestic administrative barriers, even when countries are members of the same regional trade agreement. We exploit a large reform in the European Union (the EU Service Directive) aimed at reducing such administrative hurdles in cross‐border service provision to estimate its effects on service trade. We employ a triple‐difference strategy and a Poisson pseudo‐maximum‐likelihood panel approach to estimate gravity equations with multiple fixed effects. On average, the reform increased intra‐EU trade in targeted services between a lower bound of 29% and an upper bound of 67%, translating into an overall welfare increase between 0.39% and 1.32% for the member states. This effect of the reform on service trade is corroborated by several robustness and sensitivity checks. Besides the cross‐border trade creation effect, we show that there is trade diversion at the cost of domestic flows. Furthermore, a disaggregated analysis reveals significant differences between countries and service sectors. Date: 2021 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:worlde:v:44:y:2021:i:10:p:2858-2886 Ordering information: This journal article can be ordered from Access Statistics for this article The World Economy is currently edited by David Greenaway More articles in The World Economy from Wiley Blackwell |
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