2004/08/01 by James E Anderson, James E. Anderson, Eric van Wincoop · 2,494 citations
Economics, Econometrics and Finance · #Computer science #Economic Growth and Productivity #Economics #Face (sociological concept) #Fiscal Policy and Economic Growth #Global trade and economics #Inference #Interpretation (philosophy) #Perspective (graphical)
paper · doi:10.1257/0022051042177649
published in Journal of Economic Literature 42(3), 691-751 (American Economic Association)
openalex publication_date 2004/08/01 · openalex created_date 2022/05/12 · openalex updated_date 2026/07/31
This paper surveys the measurement of trade costs: what we know and don't know but may usefully attempt to learn. Partial and incomplete data on direct measures of costs go with inference on implicit costs from trade flows and prices. Total trade costs in rich countries are large. The ad valorem tax equivalent is about 170 percent when pushing the data hard. Poor countries face even higher trade costs. There is a lot of variation across countries and across goods within countries, much of which makes economic sense. In our survey, theory provides interpretation and perspective and suggests improvements for the future. Some new results are presented to properly apply and interpret gravity theory and handle aggregation.