National Security and International Trade

Heejoon Kang and Michele Fratianni

No 744, Econometric Society 2004 Far Eastern Meetings from Econometric Society

Abstract: The September 11, 2001 terrorist attack to the twin towers and ensuing heightened national security measures worldwide, but particularly in the United States, are modeled to be equivalent to a thickening of trade barriers in international trade. By estimating a gravity model with a stochastic frontier technique, an effective trade barrier is quantified by “trade inefficiency,†that is by the difference between potential trade and actual trade; this is done both for country pairs and for a given country vis-à -vis all of its trading partners. The impact of higher security levels on trade is examined through hypothetical increases in border thickness, for given values of control variables

Keywords: Gravity model; political relations; stochastic frontier estimation; trade barriers (search for similar items in EconPapers)
JEL-codes: C33 F02 F13 (search for similar items in EconPapers)
Date: 2004-08-11
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Persistent link: https://EconPapers.repec.org/RePEc:ecm:feam04:744

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