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Using the new products margin to predict the industry-level impact of trade reform

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  • Using the new products margin to predict the industry-level impact of trade reform
  • Kehoe, Timothy J.; Rossbach, Jack M.; Ruhl, Kim J.
  • National Bureau of Economic Research


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Title Using the new products margin to predict the industry-level impact of trade reform
Similar Titles
Material Type Reports
Author(English)

Kehoe, Timothy J.; Rossbach, Jack M.; Ruhl, Kim J.

Publisher

Cambridge:National Bureau of Economic Research

Date 2013-12
Series Title; No NBER Working Paper Series / 19692
Pages 36
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Original Format pdf
Subject Economy < Trade
Industry and Technology < General
Holding National Bureau of Economic Research

Abstract

This paper develops a methodology for predicting the impact of trade liberalization on exports by industry (3-digit ISIC) based on the pre-liberalization distribution of exports by product (5-digit SITC). Using the results of Kehoe and Ruhl (2013) that much of the growth in trade after trade liberalization is in products that are traded very little or not at all, we predict that industries with a higher share of exports generated by least traded products will experience more growth. Using our methodology, we develop predictions for industry-level changes in trade for the United States and Korea following the U.S.-Korea Free Trade Agreement (KORUS). As a test for our methodology, we show that it performs significantly better than the applied general equilibrium models originally used for the policy evaluation of the North American Free Trade Agreement (NAFTA).