Optimal Markup Responses to Trade Policy Reform in a Small, Open Economy: Evidence From New Zealand

Liliana Winkelmann and Rainer Winkelmann

No 263768, Department of Economics Discussion Papers from University of Canterbury - New Zealand

Abstract: Recent developments in new trade theory have shown that trade liberalization in small open economies can affect terms of trade in imperfectly competitive markets. We use the natural experiment provided by the comprehensive New Zealand economic reforms in the mid 1980's to test this proposition. Using panel data on export unit values from Germany and the United States to several destinations including New Zealand, we find weak evidence for decreased export prices to New Zealand as a result of the reforms.

Keywords: International; Relations/Trade (search for similar items in EconPapers)
Pages: 19
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Persistent link: https://EconPapers.repec.org/RePEc:ags:canzdp:263768

DOI: 10.22004/ag.econ.263768

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