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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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    File URL: http://www.sciencedirect.com/science/article/B6V6D-4YXK0K5-1/2/d13ec1793feda8afd4ae951ee199d274
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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. Kei-Mu Yi, 2003. "Can Vertical Specialization Explain the Growth of World Trade?," Journal of Political Economy, University of Chicago Press, vol. 111(1), pages 52-102, February.
    2. Christian Broda & David E. Weinstein, 2004. "Globalization and the Gains from Variety," NBER Working Papers 10314, National Bureau of Economic Research, Inc.
    3. J Bradford Jensen & Andrew B Bernard, 2001. "Why Some Firms Export," Working Papers 01-05, Center for Economic Studies, U.S. Census Bureau.
    4. Tibor Besedes & Thomas J. Prusa, 2003. "On the Duration of Trade," NBER Working Papers 9936, National Bureau of Economic Research, Inc.
    5. 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.
    6. Timothy J. Kehoe & Kim J. Ruhl, 2006. "How Important is the New Goods Margin in International Trade?," 2006 Meeting Papers 733, Society for Economic Dynamics.
    7. Daniel Trefler, 2004. "The Long and Short of the Canada-U. S. Free Trade Agreement," American Economic Review, American Economic Association, vol. 94(4), pages 870-895, September.
    8. 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.
    9. 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.
    10. Sanghamitra Das & Mark J. Roberts & James R. Tybout, 2007. "Market Entry Costs, Producer Heterogeneity, and Export Dynamics," Econometrica, Econometric Society, vol. 75(3), pages 837-873, 05.
    11. 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.
    12. Gabriel J. Felbermayr & Wilhelm Kohler, 2004. "Exploring the Intensive and Extensive Margins of World Trade," CESifo Working Paper Series 1276, CESifo Group Munich.
    13. Russell H. Hillberry & Michael A. Anderson & Edward J. Balistreri & Alan K. Fox, 2005. "Taste Parameters as Model Residuals: Assessing the "Fit" of an Armington Trade Model," Review of International Economics, Wiley Blackwell, vol. 13(5), pages 973-984, November.
    14. David Hummels & Peter J. Klenow, 2005. "The Variety and Quality of a Nation's Exports," American Economic Review, American Economic Association, vol. 95(3), pages 704-723, June.
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