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Cutting Red Tape for Trade in Services

Milena Kern, Joerg Paetzold () and Hannes Winner ()

No 2018-9, Working Papers in Economics from University of Salzburg

Abstract: 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
Date: 2018-12-12
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Persistent link: https://EconPapers.repec.org/RePEc:ris:sbgwpe:2018_009

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