Product-Level Trade Elasticity

Lionel Fontagné, Houssein Guimbard and Gianluca Orefice

Product-Level Trade Elasticity

Trade elasticity is a crucial parameter in evaluating the welfare impacts of trade liberalization. We estimate trade elasticities at the product level (6-digit of the Harmonized System comprising more than 5,000 product categories) by exploiting the variation in bilateral applied tariffs for each product category for the universe of available country pairs. This is done by constructing a panel of bilateral applied tariffs and bilateral trade covering the period 2001 to 2016. We address potential endogeneity issues as well as heteroskedasticity and selection bias due to zero flows. The obtained trade elasticities are centered around -5. We finally highlight the differences in the gains from trade arising from considering heterogeneous rather than average trade elasticities. All product level elasticities are made publicly available for sake of scrutiny and use by other researchers.

Last version [download]

CEPII working paper version [download]

Dataset HS 6-digit classification [download] version 28 Nov 2019

Dataset TiVA classification [download] version 28 Nov 2019

Dataset GTAP classification [download] version 28 Nov 2019

Related resources:

Estimations results (tariff coefficient and standard errors) version 28 Nov 2019 here

Bilateral Trade Data BACI (CEPII) here

Applied bilateral tariff MacMap (CEPII) here

Related paper:

Fontagné, L., Martin, P. and G. Orefice (2018) "The international elasticity puzzle is worse than you think", Journal of International Economics 115: 115-129.

  • Highlight: using a firm level electricity price as an instrumental variable for export prices, we estimate average firm-level trade elasticity to export price equal to -5.17
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