Working Paper: CEPR ID: DP683
Authors: James E. Anderson; J. Peter Neary
Abstract: This paper introduces a new measure, the Trade Restrictiveness Index, which measures the restrictiveness of a system of trade protection. The index is a general equilibrium application of the distance function and answers the question: `What uniform set of trade restrictions is equivalent (in welfare terms) to the initial protective structure?' The index is applicable to both tariffs and quotas and allows international and intertemporal comparisons. The index is operational and we provide an empirical example to illustrate its applicability and to show its superiority to commonly used measures.
Keywords: trade policy; tariffs; quantitative restrictions on trade; protection; trade restrictiveness index; voluntary export restraints
JEL Codes: F10; F13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Trade Restrictiveness Index (TRI) (F14) | welfare (I38) |
| changes in Trade Restrictiveness Index (TRI) (F14) | changes in welfare costs (D69) |
| Trade Restrictiveness Index (TRI) (F14) | welfare costs of tariff modifications (D69) |
| Trade Restrictiveness Index (TRI) (F14) | welfare equivalence of quota systems (D69) |
| distance function approach (R12) | Trade Restrictiveness Index (TRI) (F14) |