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Missing Tariffs

Author

Listed:
  • Feodora Teti

    (ifo Institute, LMU Munich, CESifo)

Abstract

Many studies use tariffs to measure changes in trade policy. This paper shows that standard sources for tariffs suffer from substantial measurement error due to misreporting and the resulting false imputation: Countries fail to report tariffs every year and missing data are more prevalent for preferential than for most favored nation (MFN) tariffs. WITS, the main data provider for tariffs, falsely interpolates missing preferential tariffs with MFN tariffs. This practice leads to artificial spikes in bilateral time series data and, hence, induces massive measurement error. I introduce a new global tariff dataset at the six-digit product level for 197 countries and 30 years that combines five different sources for tariffs and proposes a new interpolation algorithm taking the misreporting into account. Lastly, I show using gravity that correcting for the messy data increases the estimates of the trade elasticity by 2.89 times.

Suggested Citation

  • Feodora Teti, 2023. "Missing Tariffs," Rationality and Competition Discussion Paper Series 458, CRC TRR 190 Rationality and Competition.
    • Handle: RePEc:rco:dpaper:458
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    References listed on IDEAS

    as
    1. Head, Keith & Mayer, Thierry, 2014. "Gravity Equations: Workhorse,Toolkit, and Cookbook," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 131-195, Elsevier.
    2. Lorenzo Caliendo & Robert C. Feenstra & John Romalis & Alan M. Taylor, 2015. "Tariff Reductions, Entry, and Welfare: Theory and Evidence for the Last Two Decades," NBER Working Papers 21768, National Bureau of Economic Research, Inc.
    3. Andreas Dür & Leonardo Baccini & Manfred Elsig, 2014. "The design of international trade agreements: Introducing a new dataset," The Review of International Organizations, Springer, vol. 9(3), pages 353-375, September.
    4. Ingo Borchert & Mario Larch & Serge Shikher & Yoto V. Yotov, 2021. "The International Trade and Production Database for Estimation (ITPD-E)," International Economics, CEPII research center, issue 166, pages 140-166.
    5. Hillberry, Russell & Hummels, David, 2013. "Trade Elasticity Parameters for a Computable General Equilibrium Model," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 1213-1269, Elsevier.
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    More about this item

    Keywords

    tariffs; MFN; preferences; trade elasticity;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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    This paper has been announced in the following NEP Reports:

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