NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
loading...

The Elasticity of Trade: Estimates and Evidence

Ina Simonovska, Michael E. Waugh

NBER Working Paper No. 16796
Issued in February 2011, Revised in July 2013
NBER Program(s):International Trade and Investment

Quantitative results from a large class of structural gravity models of international trade depend critically on the elasticity of trade with respect to trade frictions. We develop a new simulated method of moments estimator to estimate this elasticity from disaggregate price and trade-flow data and we use it within Eaton and Kortum's (2002) Ricardian model. We apply our estimator to disaggregate price and trade-flow data for 123 countries in the year 2004. Our method yields a trade elasticity of roughly four, nearly fifty percent lower than Eaton and Kortum's (2002) approach. This difference doubles the welfare gains from international trade.

download in pdf format
   (416 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w16796

Published: Simonovska, Ina & Waugh, Michael E., 2014. "The elasticity of trade: Estimates and evidence," Journal of International Economics, Elsevier, vol. 92(1), pages 34-50. citation courtesy of

Users who downloaded this paper also downloaded* these:
Broda and Weinstein w10314 Globalization and the Gains from Variety
Levchenko and Zhang w16806 The Evolution of Comparative Advantage: Measurement and Welfare Implications
Eaton, Kortum, Neiman, and Romalis w16666 Trade and the Global Recession
Simonovska and Waugh w20495 Trade Models, Trade Elasticities, and the Gains from Trade
Bussiere, Callegari, Ghironi, Sestieri, and Yamano w17712 Estimating Trade Elasticities: Demand Composition and the Trade Collapse of 2008-09
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us