Import Demand Elasticities and Trade Distortions
To study the effects of tariffs on gross domestic product (GDP), one needs import demand elasticities at the tariff line level that are consistent with GDP maximization. These do not exist. The authors modify Kohli's (1991) GDP function approa...
| Main Authors: | , , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
Washington, DC: World Bank
2013
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2004/11/5457717/import-demand-elasticities-trade-distortions http://hdl.handle.net/10986/13899 |
| Summary: | To study the effects of tariffs on gross
domestic product (GDP), one needs import demand elasticities
at the tariff line level that are consistent with GDP
maximization. These do not exist. The authors modify
Kohli's (1991) GDP function approach to estimate demand
elasticities for 4,625 imported goods in 117 countries.
Following Anderson and Neary (1992, 1994) and Feenstra
(1995), they use these estimates to construct theoretically
sound trade restrictiveness indices, and GDP losses
associated with existing tariff structures. Countries are
revealed to be 30 percent more restrictive than their simple
or import-weighted average tariffs would suggest. Thus,
distortion is nontrivial. GDP losses are largest in China,
Germany, India, Mexico, and the United States. |
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