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Evaluating a Simple Method for Estimating Sub-National Trade Flows

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  • Hallren, Ross

Abstract

Given the non-uniform distribution of industrial activity within a country, it is well-established that the effects from changes in trade policy have considerable sub-national heterogeneity. (Andriamananjara, Balistreri and Ross (2006), Balistreri, Bohringer, and Rutherford (2018), and Caceres, Cerdeiro, and Mano (2019)) For industry specific, partial equilibrium analysis, a gravity model based approach, as in Riker (2019), is potentially the most tractable method for time-sensitive analysis because it relies on readily available national accounts and import data to estimate sub-national flows. In this paper, we utilize Japanese inter-prefectural trade flow data from the Japanese inter-regional input-output table from 2005, the most recent year available, to evaluate the estimation method proposed in Riker (2019). In the first round results, we find that the gravity model based method approximates the observed inter-prefectural flow pat-tern reported in the 2005 Japan inter-regional input-output table, but only after tuning of the trade cost parameters. The main challenge is the lack of trade publicly available Japanese import trade margin data.

Suggested Citation

  • Hallren, Ross, 2020. "Evaluating a Simple Method for Estimating Sub-National Trade Flows," Conference papers 333171, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
  • Handle: RePEc:ags:pugtwp:333171
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    References listed on IDEAS

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    1. Christoph Boehringer & Edward Balistreri & Thomas Rutherford, 2018. "Quantifying Disruptive Trade Policies," Working Papers V-415-18, University of Oldenburg, Department of Economics, revised Nov 2018.
    2. Horridge, Mark & Madden, John & Wittwer, Glyn, 2005. "The impact of the 2002-2003 drought on Australia," Journal of Policy Modeling, Elsevier, vol. 27(3), pages 285-308, April.
    3. Andriamananjara, Soamiely & Balistreri, Edward J. & Ross, Martin T., 2006. "State-level equity and the demise of the Agreement on Textiles and Clothing," The North American Journal of Economics and Finance, Elsevier, vol. 17(1), pages 17-33, March.
    4. Polenske, Karen R, 1970. "An Empirical Test of Interregional Input-Output Models: Estimation of 1963 Japanese Production," American Economic Review, American Economic Association, vol. 60(2), pages 76-82, May.
    5. Carlos Caceres & Mr. Diego A. Cerdeiro & Rui Mano, 2019. "Trade Wars and Trade Deals: Estimated Effects using a Multi-Sector Model," IMF Working Papers 2019/143, International Monetary Fund.
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