Estimating the impact of country‐level policy restrictions on services trade

Antoine Gervais

Review of International Economics, 2018, vol. 26, issue 4, 743-767

Abstract: Standard techniques used to estimate gravity equations, rely on bilateral variation to identify the effect of trade barriers on bilateral trade flows. In this paper, I develop a method that estimates the effects of country‐level variables on trade between countries in the presence of firm heterogeneity and country selection into trade, a natural extension of existing empirical models of international trade. I implement the method in services data, where available measures of trade policy provide information on the average level of regulations restricting entry into a country. The results suggest that policy barriers are important determinants of services trade flows.

Date: 2018
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