EconPapers    
Economics at your fingertips  
 

Trade barriers and the relative price of tradables

Michael Sposi ()

Journal of International Economics, 2015, vol. 96, issue 2, 398-411

Abstract: In this paper I quantitatively address the role of trade barriers in explaining why prices of services relative to tradables are positively correlated with levels of development across countries. I argue that trade barriers play a crucial role in shaping the cross-country pattern of specialization across many tradable goods. I construct a multi-country, general equilibrium model of trade and derive tractable predictions that show how specialization affects relative prices. I calibrate the model to match the patterns of prices, levels of development, and bilateral trade across 103 countries. Through counterfactuals I find that removing trade barriers eliminates more than half of the gap in the relative price of services between rich and poor countries with only a minimal systematic effect on the absolute price of tradables.

Keywords: Relative prices; Tradables; Nontradables; Trade barriers (search for similar items in EconPapers)
JEL-codes: F1 O4 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0022199615000537
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Trade barriers and the relative price tradables (2013) Downloads
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:96:y:2015:i:2:p:398-411

DOI: 10.1016/j.jinteco.2015.02.003

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 Catherine Liu ().

 
Page updated 2021-09-13
Handle: RePEc:eee:inecon:v:96:y:2015:i:2:p:398-411