The indirect effects of nontariff factors on trade (through their interaction with tariff reductions) are estimated by means of a panel threshold model. Such a model allows investigation of possible breaks in the tariff-traderelationship while accounting for country-specific effects (that is, controlling for fixed effects) using standard econometric techniques. What are the main results?
Tariff reductions overall have a much larger effect on trade when a country’s hard infrastructure is above a certain threshold. Specifically, once the quality of hard
It has been two years since the trade tensions erupted and not only captured policymakers’ but also the research community’s attention. Research has quickly zoomed in on understanding trade war rhetoric, tariff implementation, and economic impacts. The first article in the December 2019 issue sheds light on the consequences of the recent trade barriers.