Cutting Red Tape for Trade in Services
Joerg Paetzold () and
Hannes Winner ()
No 2018-9, Working Papers in Economics from University of Salzburg
Trade in services is often hampered by domestic administrative barriers, even when countries are members of the same regional trade agreement. We exploit a large reform in the European Union (the EU Service Directive) targeted to reduce such administrative hurdles in cross border service provision to estimate its effects on service trade. We employ a difference-in-difference strategy and a Pseudo Poisson Maximum Likelihood (PPML) panel approach to estimate gravity equations with multiple high-dimensional fixed effects. On average, the reform increased intra-EU trade in targeted services by about 40%. This effect of the reform on trade volume is corroborated by several robustness and placebo checks. Finally, a disaggregated analysis reveals significant differences between countries and service sectors.
Keywords: Service trade; trade liberalisation; gravity equation (search for similar items in EconPapers)
JEL-codes: F13 F14 F15 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec and nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:ris:sbgwpe:2018_009
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