IDEAS home Printed from https://ideas.repec.org/p/cop/wpaper/g-119.html
   My bibliography  Save this paper

How Reliable are Intra-Industry Trade Measures as Indicators of Adjustment Costs?

Author

Listed:
  • Jayant Menon

Abstract

A number of recent papers have examined measures of intra-industry trade (IIT) and related indicators such as matched and unmatched changes in trade (MCIT and UCIT) as indicators of adjustment costs associated with trade expansion or contraction. We make three contributions to this literature. First, we clarify what is meant by adjustment costs in the context of these IIT-related measures. Second, we present new measures of MCIT and UCIT. Third, we compare our measures with existing measures using some simple numerical examples and data on Irish chemicals trade. We find that previous IIT-related measures tend to overestimate the extent of MCIT, and underestimate UCIT. We also find that the extent of the bias in these measures can be substantial. Thus, they are unreliable as indicators of adjustment costs. Our measures overcome these limitations.

Suggested Citation

  • Jayant Menon, 1996. "How Reliable are Intra-Industry Trade Measures as Indicators of Adjustment Costs?," Centre of Policy Studies/IMPACT Centre Working Papers g-119, Victoria University, Centre of Policy Studies/IMPACT Centre.
    • Handle: RePEc:cop:wpaper:g-119
    as

    Download full text from publisher

    File URL: http://www.copsmodels.com/ftp/workpapr/g-119.pdf
    File Function: Initial version, 1996-03
    Download Restriction: no
    File URL: http://www.copsmodels.com/elecpapr/g-119.htm
    File Function: Local abstract: may link to additional material.
    Download Restriction: no

    References listed on IDEAS

    as
    1. Dixon, Peter B & Menon, Jayant, 1997. "Measures of Intra-industry Trade as Indicators of Factor Market Disruption," The Economic Record, The Economic Society of Australia, vol. 73(222), pages 233-237, September.
    2. Marius Brülhart, 1994. "Marginal intra-industry trade: Measurement and relevance for the pattern of industrial adjustment," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 130(3), pages 600-613, September.
    3. Jayant Menon & Peter B. Dixon,, "undated". "Regional Trading Agreements and Intra-Industry Trade," Discussion Papers 95/14, University of Nottingham, CREDIT.
    4. Clive Hamilton & Paul Kniest, 1991. "Trade liberalisation, structural adjustment and intra-industry trade: A note," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 127(2), pages 356-367, June.
    5. Greenaway, David & Milner, Chris R, 1983. "On the Measurement of Intra-Industry Trade," Economic Journal, Royal Economic Society, vol. 93(372), pages 900-908, December.
    6. Jayant Menon & Peter Dixon, 1996. "How important is intra-industry trade in trade growth?," Open Economies Review, Springer, vol. 7(2), pages 161-175, April.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    intra-industry trade; matched changes in trade; adjustment costs;

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cop:wpaper:g-119. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Horridge). General contact details of provider: http://edirc.repec.org/data/cpmonau.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.