Working Paper: NBER ID: w30807
Authors: James E. Anderson
Abstract: Non-parametric gravity as defined in this paper encompasses previous parametric forms. The model generates non-parametric sufficient statistics for arbitrage gains from trade and terms of trade, and a non-parametric elasticity of terms of trade with respect to supply. For world manufacturing trade 2000-2014, China’s gains rose 2%yearly and terms of trade fell 8.3%. US gains fell 2% yearly and terms of trade rose 5.5%. Counterfactual industrial policy that raises US 2014 world sales share by 1% lowers US gains per unit 0.72%, leaving a surplus of 0.28%. A novel minimum distance estimator generates the CES trade elasticity required.
Keywords: No keywords provided
JEL Codes: F10; F14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| terms of trade (F14) | gains from trade (F11) |
| supply changes (M11) | terms of trade movements (F14) |
| industrial policy affecting supply shares (L59) | changes in terms of trade (F14) |
| 1% increase in supply (E31) | deterioration in terms of trade (US) (F14) |
| 1% increase in supply (E31) | deterioration in terms of trade (China) (F14) |
| terms of trade (US) (F14) | gains from trade (US) (F11) |
| terms of trade (China) (F14) | gains from trade (China) (F19) |