Comment: Inferring trade costs from trade booms and trade busts

Corlay, Guillaume; Dupraz, Stéphane; Labonne, Claire; Muller, Anne; Antonin, Céline; Daudin, Guillaume

Comment: Inferring trade costs from trade booms and trade busts

Guillaume Corlay, Stéphane Dupraz, Claire Labonne, Anne Muller, Céline Antonin and Guillaume Daudin
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Guillaume Corlay: ENSAE - Ecole Nationale de la Statistique et de l'Analyse Economique - Ecole Nationale de la Statistique et de l'Analyse Economique
Claire Labonne: ENSAE - Ecole Nationale de la Statistique et de l'Analyse Economique - Ecole Nationale de la Statistique et de l'Analyse Economique, Centre de recherche de la Banque de France - Banque de France
Anne Muller: ENSAE - Ecole Nationale de la Statistique et de l'Analyse Economique - Ecole Nationale de la Statistique et de l'Analyse Economique

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Abstract: Jacks et al. (2011) offer a method to measure trade costs that relies exclusively on bilateral exports and GDP statistics. 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). This potentially major result is driven by the use of an ad hoc aggregation method of bilateral trade costs at the country and at the global levels. What Jacks et al. (2011) capture is that some pairs of countries experienced faster trade growth in the first globalization than in the second globalization. More generally, we cast doubts on the possibility to reach conclusions on aggregate costs with a method that excludes a priori changes in non-trade costs determinants of openness rates and hence can only rephrase the information contained in them.

Keywords: Trade costs; Globalization; Gravity model; Aggregation; Structure effect (search for similar items in EconPapers)
Date: 2017
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Published in International Economics, 2017, 152, ⟨10.1016/j.inteco.2017.10.001⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:spmain:hal-01663009

DOI: 10.1016/j.inteco.2017.10.001

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