Dr. Heiner Mikosch - Seminar Presentation

Prof. Peter Egger

Date and Time: September 29th, 2016, 10:00 - 11:30 am

Room: A 101 in the Economics Building (Museum)

About the paper

This paper evaluates potentially heterogeneous direct plus indirect effects of policy-related trade costs. It accounts for endogeneity in policy-related trade costs by modelling how they are determined by fundamental drivers of bilateral trade.

It disentangle two sources of non-linearity/heterogeneity:

• from structural general equilibrium effects (homogeneous trade-cost changes induce heterogeneous indirect effects);

• from heterogeneous direct effects (homogeneous trade-cost changes induce heterogeneous direct effects).

Conclusion

The authors unveil important non-linearities of the trade-cost function in trade-policy variables. Customary assumption of linearity of the bilateral trade cost function downward-biases the heterogeneity of overall tariff effects on trade (and other outcomes) drastically.

This puts prominent figures on the costs of autarky in perspective:

• we are probably extrapolating too much in view of the data support;

• the trade cost function becomes steeper in trade-policy parameters already in the tails of the supported data.

 

About the Speaker

Peter H. Egger has been a Professor of Applied Economics at KOF, the Swiss Institute for Business Cycle Research in the Department of Management, Technology and Economics since 2009. In the same year, he became Head of the Division Structural Change and Innovation at KOF. His research focus is on applied and theoretical panel econometrics (time-invariant variables, long- and short-run estimates, spatial econometrics), applied and theoretical international and regional economics (outsourcing, multinational firms, trade volumes; economic integration, new economic geography), industrial organization and multinational firms.He published more than 100 papers in excellent internationally well-known papers in the last 7 years, among them Economica, Journal of International Economics and Economic Letters.