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A New Approach to Evaluating Trade Policy

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  • James E. Anderson
  • J. Peter Neary

Abstract

This paper introduces a new index number, the Trade Restrictiveness Index, which measures the restrictiveness of a system of trade protection. The index is a general equilibrium application of the distance function and answers the question: "What uniform set of trade restrictions is equivalent (in welfare terms) to the initial protective structure?" The index is applicable to both tariffs and quotas and permits international and intertemporal comparisons. The index is operational and we provide two empirical examples to illustrate its applicability and to show its superiority to commonly used measures.

Suggested Citation

  • James E. Anderson & J. Peter Neary, 1996. "A New Approach to Evaluating Trade Policy," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 63(1), pages 107-125.
    • Handle: RePEc:oup:restud:v:63:y:1996:i:1:p:107-125.
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    File URL: http://hdl.handle.net/10.2307/2298117
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    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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