Trade Costs, 1870-2000

@article{Jacks2008TradeC1,
  title={Trade Costs, 1870-2000},
  author={David S. Jacks and Christopher M. Meissner and Dennis Novy},
  journal={The American Economic Review},
  year={2008},
  volume={98},
  pages={529-534}
}
What has driven trade booms and trade busts in the past century and a half? Was it changes in global output or in the costs of international trade? To address this question, we derive a micro-founded measure of aggregate bilateral trade costs based on a standard model of trade in differentiated goods. These trade costs gauge the difference between observed bilateral trade and frictionless trade in terms of an implied markup on retail prices of foreign goods. Thus, we are able to estimate the… 

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