Empirical essays in international trade policy

Sohini Chowdhury, Purdue University

Abstract

This dissertation has three essays. The first essay quantifies the distortions from specific tariffs levied by rich countries. The most-favored-nation (MFN) specific tariffs levied by rich countries translate into higher tariff barriers for poor countries exporting low price goods. We show that for poor countries, these higher tariff barriers from specific tariffs offset the gains from preferential tariffs. We apply a two-stage sequential analysis using both a partial and a general equilibrium model to show that the specific tariffs levied by rich countries on their agricultural imports wash away 80% of the welfare benefits and 73% of the market access benefits enjoyed by poor countries from preferential tariffs. The second essay measures the restrictiveness of the EU's applied tariff structure, including the additional restrictiveness from specific tariffs and the reduced restrictiveness from preferential tariffs. We apply the restrictiveness indices proposed by Anderson and Neary (1994, 2003) to a CES model to show that the restrictiveness of the EU's tariff structure in terms of welfare was 16% in the year 2004. In addition, the presence of specific tariffs increase the restrictiveness index by 2 percentage points relative to ad valorem tariffs, and preferential tariffs reduce the restrictiveness index by 8 percentage points relative to most favored nation (MFN) tariffs. Finally, the increase in restrictiveness contributed by specific tariffs is significantly higher when considering only agricultural imports. The third essay estimates the price elasticities of export supply for a broad group of countries at the HS6 level of product classification. We follow the production based GDP function approach to estimate export supply elasticities for 5016 tariff lines in 113 countries. We obtain a mean elasticity of 3.82 across all commodities and all countries, after controlling for endogeneity and measurement errors in unit values, selection bias and serial correlation. Our results show that homogenous commodities have larger export supply elasticities relative to differentiated commodities, and low-income countries have lower export supply elasticities relative to rich countries in capital and skill intensive goods.

Degree

Ph.D.

Advisors

Xiang, Purdue University.

Subject Area

Economics

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