An Extension of the Trade Restrictiveness Index to Large Economies*

Dakhlia, Sami; Temimi, Akram

doi:10.1111/j.1467-9396.2006.00609.x

Cited by 4 publications

(5 citation statements)

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“…Comparisons across the two measures have little meaning (i.e., one interpretation of Dakhlia and Temimi 2006), but we will demonstrate that comparisons within the measures across countries is a valuable tool for quantifying trade restrictiveness and its channels for policy analysis. In a related theoretical application of new trade theory, Costinot and Rodríguez-Clare (2014) find multiple TRIs.…”

Section: Calculating Welfare and Trismentioning

confidence: 93%

“…This outcome is expected. Dakhlia and Temimi (2006) argue that, with large countries (i.e., upward sloping export supply), the definition of the TRI should be modified to acknowledge importer terms of trade gains. In context, Anderson and Neary (1996) originally define the TRI against free trade (as we are doing here).…”

Section: Calculating Welfare and Trismentioning

confidence: 99%

“…As we see here, welfare is no longer monotonic, giving rise to multiple TRIs. Dakhlia and Temimi (2006) thus propose a modified TRI that measures deviations from optimal tariffs. We do not pursue that logic here because our decompositions provide insight into the meaning of our multiple TRIs.…”

Section: Calculating Welfare and Trismentioning

confidence: 99%

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Trade restrictiveness indexes and welfare: A structural approach

Soderbery

2021

Canadian J of Economics

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Trade restrictiveness indexes (TRIs) have become a staple for practitioners and policy‐makers to summarize international trade barriers. TRIs theoretically found a measure of trade restrictiveness by calculating the uniform tariff that is welfare equivalent to the observed distribution of applied tariffs within a country. Here we incorporate importer market power and exporter heterogeneity into calculations of TRIs and welfare globally. To do so, we structurally estimate a quantitative model of international trade. The structure of the model allows tractable estimation of importer and exporter welfare and TRIs for every country in the world from 1990 to 2007. Canonical estimates, which ignore exporter heterogeneity and importer market power, are shown to overstate efficiency losses from tariffs by a factor of 5 for the average importer. Additionally, by not accounting for importer market power canonical methods fail to measure substantial welfare losses to exporters that are captured by importers through tariffs. These channels are shown to significantly impact the measurement and interpretation of TRIs. To conclude, we employ the methodology to evaluate China's WTO accession and a counterfactual renegotiation of NAFTA.

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Section: Calculating Welfare and Trismentioning

confidence: 93%

Section: Calculating Welfare and Trismentioning

confidence: 99%

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Trade restrictiveness indexes and welfare: A structural approach

Soderbery

2021

Canadian J of Economics

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“…The weights in the average tariff measure are the actual import shares, whereas the weights in the TRI are the derivatives of the balance of trade function, which are not observable. However, Feenstra (1995Feenstra ( , 1562 has shown that, under the special assumption of linear demand, a simplified TRI can be expressed as: Dakhlia and Temimi (2006) note that the TRI is not uniquely defined for the large country case.…”

Section: Introductionmentioning

confidence: 99%

Trade Restrictiveness and Deadweight Losses from US Tariffs

Irwin

2010

American Economic Journal: Economic Policy

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This paper calculates a trade restrictiveness index, i.e., the uniform tariff that yields the same welfare loss as an existing tariff structure, for nearly a century of US data. The results show that the average tariff understates the TRI by about 75 percent. The static deadweight loss from US tariffs is about 1 percent of GDP after the Civil War, but falls almost continuously thereafter to less than one-tenth of 1 percent of GDP. Import duties produced an average welfare loss of 40 cents for every dollar of revenue, slightly higher than contemporary estimates of the marginal cost of taxation. (JEL F13, N71, N72)

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“…The methods of this article evade an existence or uniqueness problem that arises with aggregation using the TRI in the large country case. Anderson and Neary (2005, Chapter 9) and Dakhlia and Temimi (2006) note that the TRI may not exist in the large country case, and where it exists it need not be unique. Essentially, the present methods, by using two different indices, are able to get both the domestic price aggregate (and hence quantity aggregate, the trade volume) right and the tariff revenue right (and hence real income right).…”

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confidence: 99%

Consistent Trade Policy Aggregation*

Anderson

2009

Int Economic Review

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Most empirical policy work requires the aggregation of policies. Trade policy aggregation exemplifies the aggregation problem poignantly, with thousands of highly dispersed trade barriers. This paper provides methods of policy aggregation that are consistent with two common objectives of empirical work. One is to preserve real income. The other is to preserve the real volume of activity in the parts of the economy being aggregated. Both objectives must be achieved for consistent multi-country policy modeling. An application to India shows that the standard atheoretic method of aggregation overstates India's real income by around 3 times the global gains from free trade.JEL Classification: C43, D58, F13, F17 *I am grateful to Will Martin for suggesting the topic of this paper to me, and for helpful comments, to G. Chris Rodrigo for assistance with preparing the data and for helpful comments. I am also grateful to the World Bank for research support. I thank the referees for their helpful comments.Aggregation of policy variables is unavoidable in empirical work. Data limitations and computational burdens dictate that extremely detailed policies must be combined into summary indexes. The focus of this paper is on trade policy aggregation, a particularly poignant form of the problem, 1 but the discussion applies to other policy aggregation

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An Extension of the Trade Restrictiveness Index to Large Economies*

Cited by 4 publications

References 5 publications

Trade restrictiveness indexes and welfare: A structural approach

Trade restrictiveness indexes and welfare: A structural approach

Trade Restrictiveness and Deadweight Losses from US Tariffs

Consistent Trade Policy Aggregation*

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