Using new estimates of ad valorem equivalent of nontariff measures (NTMs) over time, this paper examines NTMs and tariffs’ relationship for a sample of 70 economies for 4,949 products at the 6-digit harmonized system level over the period 2003–2015. A panel data methodology models the lagged adjustment of NTMs to tariffs, consistent with a causal relationship. Trade policy substitution is found when the models are estimated in both levels and changes; with this holding for both OECD and non-OECD countries, but not for the agriculture sector in OECD countries. Overall, there is a fairly complete substitution between policy instruments in absolute terms.
ASJC Scopus subject areas
- Geography, Planning and Development