DP2044 The Mercantilist Index of Trade Policy

Author(s): James E Anderson, J Peter Neary
Publication Date: December 1998
Keyword(s): International trade policy, Quotas, Tariffs, trade liberalisation, Trade Restrictiveness Index
JEL(s): F13
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=2044

This paper develops and characterizes an index of trade policy restrictiveness defined as the uniform tariff equivalent which maintains the same volume of trade as a given set of tariffs, quotas, and domestic taxes and subsidies. We relate this volume-equivalent index to the Trade Restrictiveness Index, a welfare-equivalent measure, and relate changes in both indexes to changes in the generalized mean and variance of the tariff schedule. Applications to international cross-section and time-series comparisons of trade policy show that the new index frequently gives a very different picture than do standard indexes.