Publication Type

Working Paper

Version

publishedVersion

Publication Date

10-2022

Abstract

In this paper, we develop an estimation procedure to identify the partial (direct) effects of the GATT/WTO membership on the variable and the fixed trade cost, re-spectively. This extends the techniques of Anderson and Van Wincoop (2003) on the structural relationship of multilateral resistance terms and of Helpman, Melitz and Rubinstein (2008) on the structural modelling of trade incidence. We then develop a general equilibrium framework (that allows the presence of zero trade) to simulate the impact of variable, fixed, and total trade cost changes on the firm-level trade structure (including bilateral export productivity cutoff, weighted/unweighted extensive margin of export, intensive margin, and the mass of active firms) and the aggregate welfare, due to the GATT/WTO system (given the trade cost effects estimated from the first stage), for the period 1991–2017.

Keywords

Firm Entry/Exit, Truncated Pareto, Identification of Fixed and Variable Trade Costs, Simulation of Counterfactual Changes in Active/Inactive Trading Relationship, Quantitative Welfare Analysis

Discipline

Growth and Development | International Economics

Research Areas

International Economics

First Page

1

Last Page

76

Publisher

SMU Economics and Statistics Working Paper Series Paper No. 05-2022

City or Country

Singapore

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