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Trade Preferences and Bilateral Trade in Goods and Services: A Structural Approach

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  • Egger, Peter
  • Larch, Mario
  • Staub, Kevin E

Abstract

The large reduction in tariff rates worldwide under several rounds of the GATT is commonly credited with being one of the most notable economic policy accomplishments since World War II. However, the remarkable progress towards free trade of goods is unparalleled in trade with services where liberalization agreements are much harder to achieve and cross-border transactions are impeded by far tighter barriers than for the exchange of goods. In any case, the question as to how trade policy affects services trade is complex for various reasons. First, services transactions are much harder to measure than goods transactions and acceptable data on service trade have only recently become available, mostly for trade of OECD countries. Second, neither production nor trade of goods and services are independent; often they are even inseparable. Thus, achievements towards liberalizing cross-border trade of goods should have an impact on services and, by the same token, the lack of liberalization of services trade should be responsible for there being less goods trade than possible. We provide a general equilibrium comparative static estimate of the trade and welfare effects of trade policy measures towards goods and services trade.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 9051.

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Date of creation: Jul 2012
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Handle: RePEc:cpr:ceprdp:9051

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Keywords: Goods trade; Gravity equation; Services trade; Structural estimation;

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Cited by:
  1. Shingal, Anirudh, 2013. "Revisiting the trade effects of services agreements," MPRA Paper 51243, University Library of Munich, Germany.
  2. Peter Egger & Georg Wamser, 2013. "Effects of the Endogenous Scope of Preferentialism on International Goods Trade," CESifo Working Paper Series 4208, CESifo Group Munich.
  3. Gabriel Felbermayr & Mario Larch, 2014. "Transatlantic Free Trade: Questions and Answers from the Vantage Point of Trade Theory," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 14(4), pages 03-17, 01.
  4. Antoine Gervais & J. Bradford Jensen, 2013. "The Tradability of Services: Geographic Concentration and Trade Costs," NBER Working Papers 19759, National Bureau of Economic Research, Inc.
  5. Badi H. Baltagi & Peter Egger & Michael Pfaffermayr, 2014. "Panel Data Gravity Models of International Trade," CESifo Working Paper Series 4616, CESifo Group Munich.

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