Bilateral Trade Imbalances
- Author(s)
- Alejandro Cunat, Robert Zymek
- Abstract
If sectoral trade flows obey structural gravity, countries’ bilateral trade imbalances are the result of macro trade imbalances, “triangular trade”, or pairwise asymmetric trade barriers. Using data for 40 major economies and the Rest of the World, we show that large and pervasive asymmetries in trade barriers are required to account for most of the observed variation in bilateral imbalances. A dynamic quantitative trade model suggests that eliminating these asymmetries would significantly reduce bilateral (but not macro) imbalances and have sizeable impacts on welfare. We provide evidence that the asymmetries we measure are in part related to the policy environment: trade inside the European Single Market appears to be subject to more bilaterally symmetric frictions. Extending the same symmetry to all parts of the global economy would give a large boost to the real incomes of several non-E.U. countries.
- Organisation(s)
- Department of Economics
- External organisation(s)
- International Monetary Fund (IMF)
- Journal
- Review of Economic Studies
- ISSN
- 0034-6527
- DOI
- https://doi.org/10.1093/restud/rdad052
- Publication date
- 02-2023
- Peer reviewed
- Yes
- Austrian Fields of Science 2012
- 502018 Macroeconomics
- Keywords
- ASJC Scopus subject areas
- Economics, Econometrics and Finance(all)
- Portal url
- https://ucris.univie.ac.at/portal/en/publications/bilateral-trade-imbalances(4c6dbe39-3f75-4350-9c31-1b87555bf7a0).html