The objective of this course is to serve as a practical guide for trade policy analysis with the gravity model of trade. The course offers a comprehensive and balanced approach between theory and empirics: It describes best practices for estimating the partial equilibrium effects of trade policy within the structural gravity model and also outlines novel methods for quantifying the general equilibrium (GE) impact changes in trade barriers within the same theoretical framework. The course achieves these objectives by bringing cutting edge academic research to the classroom in order to offer a unique hands-on approach to trade policy analysis, thus increasing access to applied economists, policymakers, and students, and improving intuition about results. An attractive and novel feature of the course is that it complements a rigorous theoretical exposition with a series of applications and empirical exercises, including estimation of the partial and the GE effects of FTAs and MFN tariffs within the same theoretically-consistent framework. Importantly, owing to recent research developments, all experiments and exercises in this course (including the general equilibrium simulations), are performed with standard built-in commands directly in Stata. The course traces the evolution of the structural gravity model from its initial a-theoretical applications to most recent structural estimation gravity frameworks, e.g. dynamic gravity.
Yoto Yotov (Drexel)