The Mercantilist Index of Trade Policy.

Journal article

We introduce an index of trade policy restrictiveness defined as the uniform tariff that maintains the same trade volume as a given tariff/quota structure. Our index overcomes the problems of the trade-weighted average tariff: It avoids substitution bias, correctly accounts for general equilibrium transfers, and takes import volume instead of welfare as benchmark. Empirical applications to international cross section and time-series comparisons of trade policy confirm our theoretical results: Trade-weighted average tariffs generally underestimate the true height of tariffs as measured by the trade-volume-equivalent index; this in turn always underestimates the welfare-equivalent index.

Authors: Anderson, J; Neary, J

• Publisher: Blackwell Publishing
• Journal: International Economic Review
• Volume: 44
• Issue: 2
• Pages: 627 - 645
• Publication date: 2003-01-01
• DOI: 10.1111/1468-2354.t01-1-00083
• ISSN: 0020-6598
• Language: English