The Long and Short (Run) of Trade Elasticities

Boehm, Christoph; Levchenko, Andrei A.; Pandalai-Nayar, Nitya

doi:10.1257/aer.20210225

Cited by 50 publications

(8 citation statements)

References 88 publications

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“…Importantly, these studies do not include bilateral country-pair fixed effects in their econometric specifications. However, recent evidence suggests that elasticity estimates obtained from gravity models that account for bilateral country-pair fixed effects, which control for unobserved heterogeneity in policy variables, as in the current study, tend to be systematically smaller in magnitude than estimates obtained from models that do not include country-pair fixed effects (Boehm et al, 2023;Ridley et al, 2022). 21 For the estimates on the effects of PTA membership, we uncover divergent impacts across the three categories: for beef, a negative and significant estimate, and for pork and poultry, positive (though insignificant) estimates.…”

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confidence: 67%

Impacts of tariffs and NTMs on beef, pork and poultry trade

Ridley,

Luckstead,

Devadoss

2024

J Agricultural Economics

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Though tariffs have declined in recent years, the number of applied non‐tariff measures (NTMs) in meat trade has expanded. We estimate the impacts of tariffs and NTMs (sanitary and phytosanitary [SPS] measures, technical barriers to trade [TBTs], quantitative restrictions, and special safeguard measures) on beef, pork and poultry trade using a structural gravity model. Our baseline regression results show tariffs hinder trade, but SPS measures and TBTs on average expand trade for these three meat products. Using the estimates from our structural gravity model, we simulate the differential effects of declining tariffs versus proliferation of NTMs between 2003 and 2019. The simulation results show that tariff reductions during this period expanded global trade by a cumulative US$466.2 million for the three products, ceteris paribus. In contrast, growth in the number of NTMs caused global meat trade to rise by US$8.4 billion. Our findings thus suggest that the marked increase in the number of applied NTMs in recent decades has had a dramatically larger impact on global meat trade than tariff reductions.

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contrasting

confidence: 67%

Impacts of tariffs and NTMs on beef, pork and poultry trade

Ridley,

Luckstead,

Devadoss

2024

J Agricultural Economics

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“…We calibrate the elasticity of substitution between domestic goods and imported goods to θ = 0.8, which is in line with empirical literature. For example, Boehm et al (2023) find that the elasticity of trade flows to exogenous changes in tariffs is about -0.76 in the short run and about -2 in the long run (see also Di Giovanni et al, 2023). Since our model focuses on the short-run fluctuations induced by trade uncertainty, our calibration of θ = 0.8 is consistent with the short-run elasticity estimated by Boehm et al (2023).…”

Section: Parameter Calibrationmentioning

confidence: 99%

Reshoring, Automation, and Labor Markets Under Trade Uncertainty

Leduc,

Liu

2024

ERWP

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We study the implications of trade uncertainty for reshoring, automation, and U.S. labor markets. Rising trade uncertainty creates incentive for firms to reduce exposures to foreign suppliers by moving production and distribution processes to domestic producers. However, we argue that reshoring does not necessarily bring jobs back to the home country or boost domestic wages, especially when firms have access to labor-substituting technologies such as automation. Automation improves labor productivity and facilitates reshoring, but it can also displace jobs. Furthermore, automation poses a threat that weakens the bargaining power of low-skilled workers in wage negotiations, depressing their wages and raising the skill premium and wage inequality. The model predictions are in line with industry-level empirical evidence.

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“…23 In this scenario, the average economy's GDP falls by 0.8 percent under the 22 The elasticity of tariff-exclusive trade flows to tariff changes estimated by Boehm, Levchenko, and Pandalai-Nayar (2020) equals the elasticity of substitution in the Armington (1969)/ Krugman (1980) setting. Boehm, Levchenko, and Pandalai-Nayar (2020) estimate that the long-term elasticity ranges from 1.75 to 2.25. The counterfactual analysis chooses a parameter value of 2.0 to discipline the upper bound of short-term elasticity.…”

Section: Diversification and Substitutability Can Boost Resilience To...mentioning

confidence: 99%

World Economic Outlook, April 2022

2022

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This version of the World Economic Outlook (WEO) is available in full through the IMF eLibrary (www.elibrary. imf.org) and the IMF website (www.imf.org). Accompanying the publication on the IMF website is a larger compilation of data from the WEO database than is included in the report itself, including files containing the series most frequently requested by readers. These files may be downloaded for use in a variety of software packages.The data appearing in the WEO are compiled by the IMF staff at the time of the WEO exercises. The historical data and projections are based on the information gathered by the IMF country desk officers in the context of their missions to IMF member countries and through their ongoing analysis of the evolving situation in each country. Historical data are updated on a continual basis as more information becomes available, and structural breaks in data are often adjusted to produce smooth series with the use of splicing and other techniques. IMF staff estimates continue to serve as proxies for historical series when complete information is unavailable. As a result, WEO data can differ from those in other sources with official data, including the IMF's International Financial Statistics.The WEO data and metadata provided are "as is" and "as available," and every effort is made to ensure their timeliness, accuracy, and completeness, but these cannot be guaranteed. When errors are discovered, there is a concerted effort to correct them as appropriate and feasible. Corrections and revisions made after publication are incorporated into the electronic editions available from the IMF eLibrary (www.elibrary.imf.org) and on the IMF website (www.imf.org). All substantive changes are listed in detail in the online tables of contents.For details on the terms and conditions for usage of the WEO database, please refer to the IMF Copyright and Usage website (www.imf.org/external/terms.htm).

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The Long and Short (Run) of Trade Elasticities

Cited by 50 publications

References 88 publications

Impacts of tariffs and NTMs on beef, pork and poultry trade

Impacts of tariffs and NTMs on beef, pork and poultry trade

Reshoring, Automation, and Labor Markets Under Trade Uncertainty

World Economic Outlook, April 2022

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