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Trade, Product Variety and Welfare: A Quantitative Assessment for the Transition Economies in Central and Eastern Europe

Author

Listed:
  • Ralf Ruhwedel

  • Michael Funke

Abstract

We calculate welfare gains of trade liberalization in the Central and East European transitioneconomies, following the approach of Romer (1994), who emphasized that proper modeling ofthe impact of trade restrictions on the number of available product varieties is crucial toquantifying the welfare impact of trade liberalization. The empirical work relies on directmeasures of product variety calculated from 5-digit trade data. Although the issue is far fromsettled, the emerging conclusion is that freer trade has boosted welfare.

Suggested Citation

  • Ralf Ruhwedel & Michael Funke, 2004. "Trade, Product Variety and Welfare: A Quantitative Assessment for the Transition Economies in Central and Eastern Europe," Quantitative Macroeconomics Working Papers 20401, Hamburg University, Department of Economics.
    • Handle: RePEc:ham:qmwops:20401
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    Cited by:

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    2. Bel Hadj Tarek, 2012. "Product Differentiation and Intra-Industrial Trade: Quantitative Assessment in the Case of Tunisia," Journal of Economics and Behavioral Studies, AMH International, vol. 4(10), pages 570-587.
    3. Nirvikar Singh, 2008. "Transaction costs, information technology and development," Indian Growth and Development Review, Emerald Group Publishing Limited, vol. 1(2), pages 212-236, September.
    4. Paul R. Bergin & Reuven Glick, 2005. "Tradability, Productivity, and Understanding International Economic Integration," NBER Working Papers 11637, National Bureau of Economic Research, Inc.
    5. Andreea Vass, 2005. "Romania and the trade and the development approaches to CEE convergence with the EU, under the competitive pressures of integration," IWE Working Papers 151, Institute for World Economics - Centre for Economic and Regional Studies.
    6. Marta Arespa, 2013. "The intensive and the extensive margins: not only an international issue," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 12(1), pages 1-34, April.
    7. Itai Agur, 2006. "Firm Heterogeneity and the Two Sources of Gains from Trade," Economics Working Papers ECO2006/38, European University Institute.
    8. Paul R. Bergin & Reuven Glick, 2005. "Tradability, Productivity, and Understanding International Economic Integration," NBER Working Papers 11637, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

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    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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