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Comment: Inferring Trade Costs from Trade Booms and Trade Busts

Guillaume Corlay, Stéphane Dupraz (), Claire Labonne, Anne Muller, Céline Antonin and Guillaume Daudin ()
Additional contact information
Guillaume Corlay: ENSAE
Claire Labonne: PSE - Banque de France
Anne Muller: ENSAE
Céline Antonin: OFCE-Sciences Po

No 2016-25, Documents de Travail de l'OFCE from Observatoire Francais des Conjonctures Economiques (OFCE)

Abstract: Jacks et al. (2011) offer an alternative to price gaps to quantify trade costs. Implementing a method which consists in deducing international trade costs from trade flows, they argue that the reduction in trade costs was the main driving force of trade growth during the first globalization (1870-1913), whereas economic expansion was the main driving force during the second globalization (1950-2000). We argue that this important result is driven by the use of an ad hocaggregation method. What Jacks et al. (2011) capture is the difference in the relative starting trade of dyads experiencing faster trade growth in the first and second globalization. More generally, we cast doubts on the possibility to reach conclusions of such nature with a method that infers trade costs from trade flows, and then uses these costs to explain trade flows. We argue that it can only rephrase the information already contained in openness ratios.

Keywords: Trade Costs; globalization; gravity model; aggregation; structure effect (search for similar items in EconPapers)
JEL-codes: F14 N70 (search for similar items in EconPapers)
Date: 2016-07
New Economics Papers: this item is included in nep-his and nep-int
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Related works:
Journal Article: Comment: Inferring trade costs from trade booms and trade busts (2017) Downloads
Journal Article: Comment: Inferring trade costs from trade booms and trade busts (2017) Downloads
Working Paper: Comment: Inferring trade costs from trade booms and trade busts (2017)
Working Paper: Comment: Inferring Trade Costs from Trade Booms and Trade Busts (2017) Downloads
Working Paper: Comment: Inferring Trade Costs from Trade Booms and Trade Busts (2016) Downloads
Working Paper: Comment: Inferring Trade Costs from Trade Booms and Trade Busts (2016) Downloads
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