Analyzing Bilateral Trade Barriers under Global Trade Context: A Gravity Model Adjusted Trade Intensity Index Approach / Bo Chen and Yao Li

Abstract:
There are two strands of approaches gauging bilateral trade barriers: the gravity models and the trade intensity index. This paper integrates these two approaches by developing a new trade intensity index. This so called “gravity model adjusted trade intensity” (GMATI) index can reflect the short run trade barriers while controlling for the long run ones under global trade context. Based on 182 countries’ export data during 1988–2005, we first estimate the expected bilateral trade level using a gravity model with comparative advantage effects. Then we apply the GMATI index for China. While the conventional trade intensity index shows that China trades less than its expected level, our GMATI index nevertheless suggests the opposite in most cases. It indicates that after considering the effect of country characteristics such as distance, economic size and comparative advantage, China’s world trade face less trade barriers than the world average level.

Full-text available in .pdf

Advertisements

Comments do not require moderator approval but this will only last as long as everyone plays fair

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s