Affiliation:
1. University of Oregon (email: )
Abstract
Container ships travel between a fixed set of origins and destinations in round trips, inducing a negative correlation in their freight rates. I study the implications of this round trip effect on international trade and trade policy. I identify this effect and develop an instrument using it to estimate the impact of transport costs on trade. I simulate counterfactual import tariff increases in a quantitative model and quantify the importance of endogenizing transport costs with respect to this effect: an exogenous transport costs model predicts a trade balance improvement from protectionist policies, while the round trip model finds the opposite. (JEL D22, F13, F14, L92, R41)
Publisher
American Economic Association
Subject
General Economics, Econometrics and Finance
Cited by
11 articles.
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