Premium
Are nontariff measures and tariffs substitutes? Some panel data evidence
Author(s) -
Niu Zhaohui,
Milner Chris,
Gunessee Saileshsingh,
Liu Chang
Publication year - 2020
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/roie.12457
Subject(s) - economics , panel data , substitution (logic) , sample (material) , international economics , ad valorem tax , econometrics , macroeconomics , public economics , tax reform , chemistry , chromatography , computer science , programming language
Using new estimates of ad valorem equivalent of nontariff measures (NTMs) over time, this paper examines NTMs and tariffs’ relationship for a sample of 70 economies for 4,949 products at the 6‐digit harmonized system level over the period 2003–2015. A panel data methodology models the lagged adjustment of NTMs to tariffs, consistent with a causal relationship. Trade policy substitution is found when the models are estimated in both levels and changes; with this holding for both OECD and non‐OECD countries, but not for the agriculture sector in OECD countries. Overall, there is a fairly complete substitution between policy instruments in absolute terms.