Trade Restrictiveness Benchmarks
This paper provides benchmarks of trade restrictiveness and year- on-year changes in trade restrictiveness using the Trade Restrictiveness Index. These benchmark measures stand in sharp contrast to standard measures. For a 28 country sample the TRI is used to compare trade policy in a recent year with free trade. Trade weighted average tariffs substantially underestimate restrictiveness measured by the 'uniform tariff equivalent' (the inverse of the TRI minus one), with the degree of underestimate positively correlated with the dispersion of the tariff structure. The rank correlation of the 'uniform tariff equivalent' and the average tariff in the sample is high, but the error implied by using the average tariff instead of the uniform tariff equivalent is substantial and variable. For a 7 case sample, year-on-year recent changes in trade policy are evaluated with the TRI and with standard measures. Here, the correlation of the TRI and changes in the standard measures is close to zero, essentially because tariff means and variances often do not move together. These conclusions appear to be robust with respect to missing data problems. The magnitude of the TRI is not very sensitive to elasticity of substitution variation, but is sensitive to the assumptions used to treat NTBs.
|Date of creation:||Jun 1995|
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|Publication status:||published, Economic Journal, 1998, 108:1111-1125.|
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CEP Discussion Papers
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