IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/2744.html
   My bibliography  Save this paper

A Gravity approach to evaluate the significance of trade liberalization in vertically-related goods in the presence of non-tariff barriers

Author

Listed:
  • Ghazalian, Pascal
  • Tamini, Lota
  • Larue, Bruno
  • Gervais, Jean-Philippe

Abstract

A gravity-based model is developed to explain bilateral trade flows in primary and processed agri-food commodities. It innovates by explicitly accounting for the vertical production linkages between primary and processed agri-food products, tariffs, and subsidies and by estimating the restrictiveness of non-tariff barriers in the upstream sector. Our application focuses on cattle/beef trade flows between forty-two countries. The structural parameters of the model are used to simulate trade flows under various scenarios of import tariffs and domestic and export subsidies reductions. The United States and Australia emerge as the exporting countries that stand to benefit the most from cuts in tariffs and subsidies as bovine meat imports in the European Union and Japan significantly increase. A bootstrap procedure is used to generate confidence intervals around predicted trade liberalization outcomes.

Suggested Citation

  • Ghazalian, Pascal & Tamini, Lota & Larue, Bruno & Gervais, Jean-Philippe, 2007. "A Gravity approach to evaluate the significance of trade liberalization in vertically-related goods in the presence of non-tariff barriers," MPRA Paper 2744, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:2744
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/2744/1/MPRA_paper_2744.pdf
    File Function: original version
    Download Restriction: no

    References listed on IDEAS

    as
    1. Khan, Shakeeb & Lewbel, Arthur, 2007. "Weighted And Two-Stage Least Squares Estimation Of Semiparametric Truncated Regression Models," Econometric Theory, Cambridge University Press, vol. 23(02), pages 309-347, April.
    2. James E. Anderson & Eric van Wincoop, 2004. "Trade Costs," Journal of Economic Literature, American Economic Association, vol. 42(3), pages 691-751, September.
    3. Werner Antweiler & Daniel Trefler, 2002. "Increasing Returns and All That: A View from Trade," American Economic Review, American Economic Association, vol. 92(1), pages 93-119, March.
    4. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
    5. John Wilson & Tsunehiro Otsuki & Baishali Majumdsar, 2003. "Balancing food safety and risk: do drug residue limits affect international trade in beef?," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 12(4), pages 377-402.
    6. Bergstrand, Jeffrey H, 1985. "The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence," The Review of Economics and Statistics, MIT Press, vol. 67(3), pages 474-481, August.
    7. Thomas W. Hertel & Will Martin, 2000. "Liberalising Agriculture and Manufactures in a Millennium Round:Implications for Developing Countries," The World Economy, Wiley Blackwell, vol. 23(04), pages 455-469, April.
    8. Gibson, Paul R. & Wainio, John & Whitley, Daniel B. & Bohman, Mary, 2001. "Profiles Of Tariffs In Global Agricultural Markets," Agricultural Economics Reports 34055, United States Department of Agriculture, Economic Research Service.
    9. Redding, Stephen & Venables, Anthony J., 2004. "Economic geography and international inequality," Journal of International Economics, Elsevier, vol. 62(1), pages 53-82, January.
    10. Gene M. Grossman & Elhanan Helpman, 2005. "Outsourcing in a Global Economy," Review of Economic Studies, Oxford University Press, vol. 72(1), pages 135-159.
    11. Cheryl J. Wachenheim & Jeremy W. Mattson & Won W. Koo, 2004. "Canadian Exports of Livestock and Meat to the United States," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 52(1), pages 55-71, March.
    12. Bergstrand, Jeffrey H, 1989. "The Generalized Gravity Equation, Monopolistic Competition, and the Factor-Proportions Theory in International Trade," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 143-153, February.
    13. Shang-Jin Wei, 1996. "Intra-National versus International Trade: How Stubborn are Nations in Global Integration?," NBER Working Papers 5531, National Bureau of Economic Research, Inc.
    14. Keith Head & Thierry Mayer, 2000. "Non-Europe: The magnitude and causes of market fragmentation in the EU," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 136(2), pages 284-314, June.
    15. Touhami Abdelkhalek & Jean-Marie Dufour, 1998. "Statistical Inference For Computable General Equilibrium Models, With Application To A Model Of The Moroccan Economy," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 520-534, November.
    16. Fabiosa, Jacinto F. & Beghin, John C. & DeCara, Stephane & Elobeid, Amani & Fang, Cheng & Isik, Murat & Matthey, Holger & Saak, Alexander, 2002. "Doha Round of the World Trade Organization and Agricultural Markets Liberalization: Impacts on Developing Economies, The," Staff General Research Papers Archive 10056, Iowa State University, Department of Economics.
    17. Renee B. Kim & Y.J. Kim & Michele Veeman, 2004. "Adjustments in the South Korean beef import market under beef import liberalization policies," Agribusiness, John Wiley & Sons, Ltd., vol. 20(2), pages 201-216.
    18. Wohlgenant, Michael K., 2001. "Marketing margins: Empirical analysis," Handbook of Agricultural Economics,in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 16, pages 933-970 Elsevier.
    19. Krinsky, Itzhak & Robb, A Leslie, 1991. "Three Methods for Calculating the Statistical Properties of Elasticities: A Comparison," Empirical Economics, Springer, vol. 16(2), pages 199-209.
    20. Thierry Mayer & Keith Head, 2002. "Illusory Border Effects: Distance Mismeasurement Inflates Estimates of Home Bias in Trade," Working Papers 2002-01, CEPII research center.
    21. Richard W. Blundell & Richard J. Smith, 1989. "Estimation in a Class of Simultaneous Equation Limited Dependent Variable Models," Review of Economic Studies, Oxford University Press, vol. 56(1), pages 37-57.
    22. Krinsky, Itzhak & Robb, A Leslie, 1986. "On Approximating the Statistical Properties of Elasticities," The Review of Economics and Statistics, MIT Press, vol. 68(4), pages 715-719, November.
    23. Nelson, Forrest & Olson, Lawrence, 1978. "Specification and Estimation of a Simultaneous-Equation Model with Limited Dependent Variables," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 19(3), pages 695-709, October.
    24. Larue, Bruno & Ker, Alan, 1993. "World Price Variability versus Protectionism in Agriculture: A Causality Analysis," The Review of Economics and Statistics, MIT Press, vol. 75(2), pages 342-346, May.
    25. Pat Westhoff & D. Scott Brown & Brian Willott & Daniel Madison & Seth Meyer & John Kruse, 2005. "The Doha Round of the World Trade Organization and Agricultural Markets Liberalization: Impacts on Developing Economies," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 27(3), pages 317-335.
    26. Baier, Scott L. & Bergstrand, Jeffrey H., 2001. "The growth of world trade: tariffs, transport costs, and income similarity," Journal of International Economics, Elsevier, vol. 53(1), pages 1-27, February.
    27. Jon D. Haveman & Usha Nair-Reichert & Jerry G. Thursby, 2003. "How Effective are Trade Barriers? An Empirical Analysis of Trade Reduction, Diversion, and Compression," The Review of Economics and Statistics, MIT Press, vol. 85(2), pages 480-485, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sampath Jayasinghe & John C. Beghin & Giancarlo Moschini, 2017. "Determinants Of World Demand For U.S. Corn Seeds: The Role Of Trade Costs," World Scientific Book Chapters,in: Nontariff Measures and International Trade, chapter 17, pages 309-320 World Scientific Publishing Co. Pte. Ltd..
    2. Kerr, William A., 2016. "Disequilibrium, Trade and the Consequenses of Adjustment," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 17(2).
    3. Ghazalian, Pascal L., 2015. "Processed Food Trade of Greece with EU and Non-EU Countries: An Empirical Analysis," MPRA Paper 67084, University Library of Munich, Germany.
    4. Martijn Burger & Frank van Oort & Gert-Jan Linders, 2009. "On the Specification of the Gravity Model of Trade: Zeros, Excess Zeros and Zero-inflated Estimation," Spatial Economic Analysis, Taylor & Francis Journals, vol. 4(2), pages 167-190.
    5. Raimondi, Valentina & Olper, Alessandro, 2009. "The sensitivity of trade flows to trade barriers," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 50658, Agricultural and Applied Economics Association.

    More about this item

    Keywords

    Gravity model; cattle/beef trade;

    JEL classification:

    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:pra:mprapa:2744. 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: (Joachim Winter) or (Rebekah McClure). General contact details of provider: http://edirc.repec.org/data/vfmunde.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.