Title

Trade restrictiveness indices in the presence of externalities: An application to non-tariff measures

Campus Units

Economics, Center for Agricultural and Rural Development

Document Type

Article

Publication Version

Submitted Manuscript

Publication Date

2015

Journal or Book Title

Canadian Journal of Economics

Volume

48

Issue

4

First Page or Article ID Number

1513

Last Page

1536

DOI

10.1111/caje.12157

Abstract

We extend the trade restrictiveness index approach to the case of market imperfections and domestic regulations addressing them. We focus on standard-like non-tariff measures (NTMs) affecting cost of production and potentially enhancing demand by reducing negative externalities. We apply the framework to the database of Kee et al. (2009) and derive ad valorem equivalents (AVEs) for technical measures. About 39% of the product lines affected by NTMs exhibit negative AVEs, indicating a net trade-facilitating effect of these measures. Accounting for these effects significantly reduces previous measures of countries’ trade policy restrictiveness obtained while constraining these NTMs to be trade-reducing.

JEL Classification

F13, F18, Q56

Comments

This is a working paper of an article from Canadian Journal of Economics 48 (2015): 1513, doi:10.1111/caje.12157. Posted with permission.