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New global estimates of bilateral AVEs of NTMs: Application to NTM harmonization in Asia-Pacific

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  • Kravchenko, Alexey
  • Narayanan, Badri
  • Utoktham, Chorthip
  • Duval, Yann

Abstract

Estimation of ad-valorem-equivalents (AVEs) of non-tariff measures (NTMs) are generally conducted using one of two approaches: price-based or quantity-based. This study uses a price-based approach to estimate the effect of different types of NTMs on price of internationally traded products, i.e. derives estimates of AVEs of NTMs. Using the derived AVE estimates, bilateral and GTAP sector-specific AVEs of NTMs are obtained by aggregating the estimated HS six-digit level AVEs using HS-GTAP sector concordance and HS six-digit level bilateral trade flows as weights. Next, the AVEs are introduced into the standard GTAP model by shocking ‘ams’ variable. This approach essentially assumes that NTMs are “shadow” tariffs equivalent to tariffs in the GTAP database, and by adding them to the existing tariffs the costs of NTMs are explicitly integrated into the model. While this is but one of many approaches of modelling NTMs in GTAP, the parsimonious nature of this method allows relatively simple approach to model NTM policies. Both, the model of estimating AVEs and the method of incorporating them into GTAP are sometimes contentious issues with many alternatives. The main goal of this paper is to provide a replicable, open source code for NTMs' AVEs estimation and integration of estimates in the GTAP model, that can be altered based on users' assumptions, levels of aggregation or particular research needs.

Suggested Citation

  • Kravchenko, Alexey & Narayanan, Badri & Utoktham, Chorthip & Duval, Yann, 2019. "New global estimates of bilateral AVEs of NTMs: Application to NTM harmonization in Asia-Pacific," Conference papers 330195, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:330195
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    References listed on IDEAS

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    3. Olivier Cadot & Julien Gourdon, 2016. "Non-tariff measures, preferential trade agreements, and prices: new evidence," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(2), pages 227-249, May.
    4. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685, December.
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