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James E. Anderson
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Journal Articles
Publisher: Journals Gateway
The Review of Economics and Statistics (2025) 107 (1): 221–239.
Published: 03 January 2025
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Export promotion at the extensive margin is a key concern of governments. We develop measures of how far firms in origin sectors are from break-even entry in destination markets. The measure is based on Almost Ideal gravity featuring heterogeneous price and income elasticities. Tobit estimation of 2006 trade flows for 75 countries and 25 sectors generates latent trade bias (LTB)—the latent (projected) trade share of nonpartners minus the as-if-frictionless trade share. Explained LTB variance decomposition shows that variable trade costs (distance and tariffs together) account for zero flows more than do fixed trade costs (entry cost) and income variation.
Includes: Supplementary data
Journal Articles
Publisher: Journals Gateway
The Review of Economics and Statistics (2002) 84 (2): 342–352.
Published: 01 May 2002
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Corruption and imperfect contract enforcement dramatically reduce international trade. This paper estimates the reduction using a structural model of import demand in which insecurity acts as a hidden tax on trade. We find that inadequate institutions constrain trade as much as tariffs do. We also find that omission of indices of institutional quality biases the estimates of typical gravity models, obscuring a negative relationship between per capita income and the share of total expenditure devoted to traded goods. Finally, we argue that cross-country variation in the effectiveness of institutions and the consequent variation in the prices of traded goods offer a simple explanation for the stylized fact that high-income, capital-abundant countries trade disproportionately with each other.