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Trade restrictiveness indices in the presence of externalities: An application to non‐tariff measures
Author(s) -
Beghin John Christopher,
Disdier AnneCélia,
Marette Stéphan
Publication year - 2015
Publication title -
canadian journal of economics/revue canadienne d'économique
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.773
H-Index - 69
eISSN - 1540-5982
pISSN - 0008-4085
DOI - 10.1111/caje.12157
Subject(s) - restrictiveness , tariff , externality , ad valorem tax , economics , index (typography) , production (economics) , product (mathematics) , microeconomics , econometrics , international economics , public economics , computer science , philosophy , linguistics , geometry , mathematics , double taxation , world wide web
We extend the trade restrictiveness index approach to the case of market imperfections and domestic regulations addressing them. We focus on standard‐like non‐tariff measures (NTMs) affecting cost of production and potentially enhancing demand by reducing negative externalities. We apply the framework to the database of Kee et al. and derive ad valorem equivalents (AVEs) for technical measures. About 39% of the product lines affected by NTMs exhibit negative AVEs, indicating a net trade‐facilitating effect of these measures. Accounting for these effects significantly reduces previous measures of countries’ trade policy restrictiveness obtained while constraining these NTMs to be trade‐reducing.