Are nontariff measures and tariffs substitutes? Some panel data evidence

Zhaohui Niu, Chris Milner, Saileshsingh Gunessee and Chang Liu

Review of International Economics, 2020, vol. 28, issue 2, 408-428

Abstract: Using new estimates of ad valorem equivalent of nontariff measures (NTMs) over time, this paper examines NTMs and tariffs’ relationship for a sample of 70 economies for 4,949 products at the 6‐digit harmonized system level over the period 2003–2015. A panel data methodology models the lagged adjustment of NTMs to tariffs, consistent with a causal relationship. Trade policy substitution is found when the models are estimated in both levels and changes; with this holding for both OECD and non‐OECD countries, but not for the agriculture sector in OECD countries. Overall, there is a fairly complete substitution between policy instruments in absolute terms.

Date: 2020
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Working Paper: Are non-tariff measures and tariffs substitutes? Some panel data evidence (2018)
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