Estimates of the trade elasticity based on actual trade policy changes are scarce, and the few that exist are all over the place. This paper offers a setting where an exogenous increase in a border tax can be used to estimate the trade elasticity. It shows theoretically and empirically that if...

Multi-sector variants of standard gravity models typically predict much larger gains from trade than their one-sector counterparts. This paper explores to what extent this result is due to the relevant cross-sector variation observed in trade elasticity and to what extent it is instead an...

Feenstra (1994) developed, and Broda and Weinstein (2006) refined, a structural estimator to estimate import demand and supply elasticities. Working through the first principles of the methodology from Leamer (1981), this paper analyzes and improves the technique to provide a unified estimator...

Recent theoretical work on international trade emphasizes the importance of trade elasticity as the fundamental statistic needed to conduct welfare analysis. Eaton and Kortum (2002) proposed a two-step method to estimate this parameter, where exporter fixed effects are regressed on proxies for...

Recent theoretical work on international trade emphasizes the importance of trade elasticity as the fundamental statistic needed to conduct welfare analysis. Eaton and Kortum (2002) proposed a two-step method to estimate this parameter, where exporter fixed effects are regressed on proxies for...