EconPapers    
Economics at your fingertips  
 

The elasticity of trade: Estimates and evidence

Ina Simonovska () and Michael Waugh

Journal of International Economics, 2014, vol. 92, issue 1, 34-50

Abstract: Quantitative results from a large class of structural gravity models of international trade depend critically on the elasticity of trade with respect to trade frictions. We develop a new simulated method of moments estimator to estimate this elasticity from disaggregate price and trade-flow data and we use it within Eaton and Kortum's (2002) Ricardian model. We apply our estimator to disaggregate price and trade-flow data for 123 countries in the year 2004. Our method yields a trade elasticity of roughly four, nearly fifty percent lower than Eaton and Kortum's (2002) approach. This difference doubles the welfare gains from international trade.

Keywords: Elasticity of trade; Bilateral; Gravity; Price dispersion; Indirect inference (search for similar items in EconPapers)
JEL-codes: F10 F11 F14 F17 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (163) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0022199613000986
Full text for ScienceDirect subscribers only

Related works:
Working Paper: The Elasticity of Trade: Estimates and Evidence (2011) Downloads
Working Paper: The Elasticity of Trade: Estimates and Evidence (2011) Downloads
Working Paper: The Elasticity of Trade: Estimates and Evidence (2011) Downloads
Working Paper: The Elasticity of Trade: Estimates & Evidence (2010) Downloads
Working Paper: The Elasticity of Trade: Estimates and Evidence (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:92:y:2014:i:1:p:34-50

DOI: 10.1016/j.jinteco.2013.10.001

Access Statistics for this article

Journal of International Economics is currently edited by Gourinchas, Pierre-Olivier and Rodríguez-Clare, Andrés

More articles in Journal of International Economics from Elsevier
Bibliographic data for series maintained by Haili He ().

 
Page updated 2020-08-08
Handle: RePEc:eee:inecon:v:92:y:2014:i:1:p:34-50