Advanced Search
MyIDEAS: Login to save this paper or follow this series

Measuring the Restrictiveness of Trade Policy

Contents:

Author Info

  • J Anderson
  • J.P. Neary

Abstract

Alternative methods of measuring the restrictiveness of trade policy are reviewed. A new measure is proposed and it is shown to be theoretically superior to other measures and to be easily implementable in practice. Measuring trade restrictiveness is an important aspect of evaluating the stance of a country's economic policy. Yet, in the presence of a variety of trade interventions, there is no consensus on how an overall summary measure of trade restrictiveness should be calculated. This paper provides an introduction to the Trade Restrictiveness Index (TRI), which the authors have proposed as a solution to this dilemma. The TRI equals the uniform tariff that is welfare?equivalent to a given pattern of trade protection. The paper outlines both its theoretical properties and the methods which have been developed to operationalise it. Anderson and Neary begin by reviewing other commonly used measures of trade restrictiveness. Measures such as the trade-weighted average tariff or the coefficient of variation of tariffs are shown to lead to potentially misleading inferences. By contrast, the TRI yields results which accord with intuition in both simple and complex situations. Furthermore, the TRI has a solid theoretical basis, can deal with both tariffs and quantitative restrictions and can be adapted to construct the trade policy equivalent of domestic distortions. The theoretical superiority of the TRI would be of little use if operationalising it required detailed information on the structure of the economy or extensive computational resources. Anderson and Neary therefore consider how the TRI may be implemented in practice and present a sequence of empirical models for doing so. For some purposes, a partial equilibrium framework may be adequate and the authors show how the Index may be estimated on a subset of imports, taking U.S. imports of textiles and apparel from Hong Kong under the Multi-Fibre Arrangement as a case study. For economy-wide trade liberalisations, a computable general equilibrium (CGE) approach is needed and the authors examine alternative methods of implementing this. These involve a trade-off between flexibility of response on the one hand and level of disaggregation on the other. Since the focus of the TRI approach is on the detailed structure of trade policy, any CGE model used to implement it must allow for thousands of distinct trade categories. Finally, the authors outline a computer program they have developed which allows the last of the models they present to be estimated. Because the structure of the economy is tightly specified, this model has very modest computing requirements and can easily be implemented on a personal computer. It can nonetheless cope with information on a large list of trade categories and holds out

Download Info

To our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.

Bibliographic Info

Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0186.

as in new window
Length:
Date of creation: Jan 1994
Date of revision:
Handle: RePEc:cep:cepdps:dp0186

Contact details of provider:
Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

Related research

Keywords:

Other versions of this item:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:cep:cepdps:dp0186. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.