On the proper computation of Ad Valorem equivalent of non-tariff measures
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EN
Article de revue
Ce document a été publié dans
Applied Economics Letters. 2020-12-20, vol. 29, n° 4, p. 1-5
Résumé en anglais
In all the previous studies evaluating the Ad Valorem Equivalent (AVE) of Non-Tariff Measures (NTMs) based on a gravity equation, Jensen’s inequality is not considered. Yet the issue of estimating the impact of dummy or ...Lire la suite >
In all the previous studies evaluating the Ad Valorem Equivalent (AVE) of Non-Tariff Measures (NTMs) based on a gravity equation, Jensen’s inequality is not considered. Yet the issue of estimating the impact of dummy or count variables in semi-log or related equations has been raised since the early eighties. In this article, we illustrate the bias associated with the omission of Jensen’s inequality and show that when it is not considered, the estimation of AVEs can be significantly biased. This omission leads to a significant underestimation of the restrictive impact of NTMs and can even change the sign of the AVE.< Réduire
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