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Do tariffs matter for the extensive margin of international trade? An empirical analysis

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  • Debaere, Peter
  • Mostashari, Shalah
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    Abstract

    With disaggregate tariff data we study the impact of changing tariffs on the range of goods countries export to the United States. Our probits with country and good effects show tariffs tend to have a statistically significant but small impact: at best 5% of the increasing extensive margin for 1989-1999 and 12% for 1996-2006 is explained by tariff reductions. This suggests the extensive margin has not amplified the impact of tariffs on trade flows to such an extent that the relatively moderate tariff reductions since WW II can explain the strong growth of world trade.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of International Economics.

    Volume (Year): 81 (2010)
    Issue (Month): 2 (July)
    Pages: 163-169

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    Handle: RePEc:eee:inecon:v:81:y:2010:i:2:p:163-169

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    Web page: http://www.elsevier.com/locate/inca/505552

    Related research

    Keywords: Trade policy Extensive margin Trade growth Fragmentation Heterogeneity;

    References

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    1. Christian Broda & David E. Weinstein, 2006. "Globalization and the Gains from Variety," The Quarterly Journal of Economics, MIT Press, vol. 121(2), pages 541-585, May.
    2. Susan E. Feinberg & Michael P. Keane, 2009. "Tariff effects on MNC decisions to engage in intra-firm and arm's-length trade," Canadian Journal of Economics, Canadian Economics Association, vol. 42(3), pages 900-929, August.
    3. Felbermayr, Gabriel & Kohler, Wilhelm K., 2006. "Exploring the intensive and extensive margins of world trade," Munich Reprints in Economics 20610, University of Munich, Department of Economics.
    4. Timothy J. Kehoe & Kim J. Ruhl, 2009. "How important is the new goods margin in international trade?," Staff Report 324, Federal Reserve Bank of Minneapolis.
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    6. Daniel Trefler, 2001. "The Long and Short of the Canada-U.S. Free Trade Agreement," NBER Working Papers 8293, National Bureau of Economic Research, Inc.
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    8. Justin Pierce & Peter Schott, 2009. "Concording U.S. Harmonized System Categories Over Time," Working Papers 09-11, Center for Economic Studies, U.S. Census Bureau.
    9. John Romalis, 2007. "NAFTA's and CUSFTA's Impact on International Trade," The Review of Economics and Statistics, MIT Press, vol. 89(3), pages 416-435, August.
    10. Sanghamitra Das & Mark J. Roberts & James R. Tybout, 2001. "Market Entry Costs, Producer Heterogeneity, and Export Dynamics," NBER Working Papers 8629, National Bureau of Economic Research, Inc.
    11. Kei-Mu Yi, 2000. "Can vertical specialization explain the growth of world trade?," Staff Reports 96, Federal Reserve Bank of New York.
    12. Chong Xiang, 2005. "New Goods and the Relative Demand for Skilled Labor," The Review of Economics and Statistics, MIT Press, vol. 87(2), pages 285-298, May.
    13. Michael P. Keane & Susan E. Feinberg, 2006. "Accounting for the Growth of MNC-Based Trade Using a Structural Model of U.S. MNCs," American Economic Review, American Economic Association, vol. 96(5), pages 1515-1558, December.
    14. Tibor Besedes & Thomas J. Prusa, 2003. "On the Duration of Trade," NBER Working Papers 9936, National Bureau of Economic Research, Inc.
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