We propose a simple and flexible econometric approach to quantify ex-ante the "deep" impact of trade liberalization and the "hard" effects of protection with the empirical structural gravity model. Specifically, we argue that the difference between the estimates of border indicator variables for...

We carry out an indirect inference test of two versions of a computable general equilibrium (CGE) model of world trade. One of these, the ‘classical’ model,is well-known as the Heckscher-Ohlin-Samuelson model of world trade, in which countries trade homogeneous products in world markets and...

We use a unique case study to estimate the effect of withdrawing from a free trade agreement on international trade. Lately, the political opposition to international economic cooperation has been on the rise, but little is known about how the withdrawal from a trade agreement affects trade. We...

The gravity equation is the workhorse model for analysis of bilateral trade flows. Despite solid theoretical foundations and clear gains from theory-consistent policy analysis, there are still gaps between gravity theory and empirics. This paper focuses on domestic trade flows, and I argue that...

Bilateral trade balances often play an important role inthe international trade policy debate. Disturbingly, several studies argue that the gravity model of trade fails when confronted with bilateral trade balances data, dubbing this "The Mystery of the Excess Trade Balances". Capitalizing on...

We document the outbreak of a trade war after the U.S. adopted the Smoot-Hawley tariff in June 1930. U.S. trade partners initially protested the possible implementation of the sweeping tariff legislation, with many eventually choosing to retaliate by increasing their tariffs on imports from the...

This paper considers the impact on trade of preferential arrangements in Europe since the 1950s. Using a first difference version of the gravity model, we find that the EEC and EFTA altered the pattern of international trade. We also find evidence of trade diversion in several cases, notably...

This paper uses a structural gravity model to explore the regional trade and welfare impact of the EU Cohesion Policy Transport Infrastructure Investment programme estimated using a novel data-set of the Generalised Transport Costs for the EU regions at the NUTS2 level. The results indicate that...

The withdrawal of the United Kingdom from the European Union has had disruptive effects on international trade. As part of its "Global Britain" strategy, in the wake of Brexit, the UK is pursuing a series of Free Trade Agreements with countries around the world, including Canada, Japan, Korea,...

On the eve of its 60th anniversary, the gravity model of trade is a "celebrity", due to its intuitive appeal, solid theoretical foundations, and remarkable empirical success. Yet, many economists still view gravity simply as an intuitive but naive reduced-form estimating equation and apply it...