Unlocking New Methods to Estimate Country-Specific Trade Costs and Trade Elasticities

R. Freeman, M. Larch, A. Theodorakopoulos, Y.V. Yotov

Research output: Other contribution


We propose new methods to identify the full impact of country-specific characteristics on bilateral trade flows within the framework of ‘the new quantitative trade model.’ We complement theory with a simple two-stage estimating procedure, and offer a proof of concept by quantifying the impact of country-specific R&D expenditure on trade. Results suggest a positive relationship overall, but a larger impact on international (versus domestic) trade. Further, our methodology allows us to recover trade elasticity estimates without the need for price/tariff data. Bringing this to the sectoral level, we obtain estimates of the trade elasticity for manufacturing, services, and tradable versus non-tradable sectors
Original languageEnglish
TypeWorking paper
Media of outputText
Number of pages42
Publication statusPublished - Nov 2021

Publication series

NameCESifo Working Papers
ISSN (Electronic)2364-1428


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