Unlocking new methods to estimate country-specific trade costs and trade elasticities

Rebecca Freeman, Mario Larch, Angelos Theodorakopoulos and Yoto Yotov

No 951, Bank of England working papers from Bank of England

Abstract: We propose new methods to identify the full impact of country-specific characteristics on bilateral trade flows within the framework of ‘the new quantitative trade model’. We complement theory with a simple two-stage estimating procedure, and offer a proof of concept by quantifying the impact of country-specific research and development expenditure on trade. Results suggest a positive relationship overall, but a larger impact on international (versus domestic) trade. Further, our methodology allows us to recover trade elasticity estimates without the need for price/tariff data. Bringing this to the sectoral level, we obtain estimates of the trade elasticity for manufacturing, services, and tradable versus non-tradable sectors.

Keywords: Structural gravity; country-specific trade costs; trade elasticity; elasticity of substitution R&D; trade (search for similar items in EconPapers)
JEL-codes: F10 F14 F16 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2021-11-19
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
https://www.bankofengland.co.uk/-/media/boe/files/ ... ade-elasticities.pdf Full text (application/pdf)

Related works:
Working Paper: Unlocking New Methods to Estimate Country-Specific Trade Costs and Trade Elasticities (2021)
Working Paper: Unlocking New Methods to Estimate Country-specific Trade Costs and Trade Elasticitie (2021)
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:boe:boeewp:0951

Access Statistics for this paper

More papers in Bank of England working papers from Bank of England Bank of England, Threadneedle Street, London, EC2R 8AH. Contact information at EDIRC.
Bibliographic data for series maintained by Digital Media Team ().