Measuring Discriminatory and Non-discriminatory trade costs

Our understanding of the trade costs has never been complete - neither about their sizes nor about their impacts. Part of it because modern trade models ignore domestic frictions, while evidence suggest the opposite. When it... [ view full abstract ]

Our understanding of the trade costs has never been complete - neither about their sizes nor about their impacts. Part of it because modern trade models ignore domestic frictions, while evidence suggest the opposite. When it comes to data, there is always data qualiy and methodology issues. Much work is done in producing international trade frictions data but �beyond the border� barrier measures are scarce. This study offer a method to measure international and domestic trade costs using observable and commonly available data in theoretically sound way, while to be able to decompose them into economically meaningful components discriminatory, non-discriminatory and transport costs. Another important contribution of this study is, using the method, I generated a product-level international and domestic trade cost data covering over 130 countries using GTAP 8 database, and estimate trade elasticities, the key parameter to obtain ad  valorem terms
of trade costs.