Cutting Red Tape for Trade in Services

Milena Kern, Jörg Pätzold and Hannes Winner

No 584, WIFO Working Papers from WIFO

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) aimed at reducing 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 fixed effects. On average, the reform increased intra-EU trade in targeted services between a lower bound of 27 percent and an upper bound of 55 percent, translating into an overall welfare increase between 0.35 and 1.04 percent. This effect of the reform on service trade is corroborated by several robustness and placebo checks. Finally, a disaggregated analysis reveals significant differences between countries and service sectors.

Pages: 38 pages
Date: 2019-06
New Economics Papers: this item is included in nep-eec and nep-int
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https://www.wifo.ac.at/wwa/pubid/61908 abstract (text/html)

Related works:
Journal Article: Cutting red tape for trade in services (2021)
Working Paper: Cutting Red Tape for Trade in Services (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:wfo:wpaper:y:2019:i:584

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