A Measurement of Aggregate Trade Restrictions and their Economic Effects
IMF Working Papers, January 7, 2022
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Bibliographic details
- Authors: Julia Estefania-Flores, Davide Furceri, Swarnali A Hannan, Jonathan David Ostry, Andrew K. Rose
- Published: January 7, 2022
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781616359645.001
Overview
- Title: A Measurement of Aggregate Trade Restrictions and their Economic Effects
- Authors: Julia Estefania-Flores, Davide Furceri, Swarnali A Hannan, Jonathan David Ostry, Andrew K. Rose
- Publication type: IMF Working Papers, Working Paper No. 2022/001
- Publication date: January 7, 2022
- Core purpose: Develop a new Measure of Aggregate Trade Restrictions (MATR) and use it to quantify the economic effects of trade policy.
Methodology and Coverage
- Data source: IMF’s Annual Report on Exchange Arrangements and Exchange Restrictions.
- Nature of MATR:
- Empirical measure of how restrictive official government policy is towards the international flow of goods and services.
- Described as simple, ad hoc, plausible, quantitative, and easily updated.
- Based solely on policy-relevant measures of trade policy.
- Sample coverage:
- Unbalanced sample of up to 157 countries annually between 1949 and 2019.
Key Findings
- MATR properties:
- MATR is strongly correlated with existing measures of openness and trade policy, but is more comprehensive than existing measures.
- Economic effects:
- Trade restrictions, as measured by MATR, are harmful for the economy.
- Trade restrictions lead to significant contractions in output.
Policy Implications and Recommendations
- Use of MATR:
- MATR can serve as a policy-relevant, updatable quantitative indicator for assessing the restrictiveness of trade policy across countries and over time.
- Policy message:
- Reducing trade restrictions is implied to be beneficial for output, given the finding that trade restrictions contract output.
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- Working Paper