Gravity-Based Tools for Assessing the Impact of Tariff Changes
This paper introduces two empirical tools to quantify the impact of tariff changes on trade and welfare, applying these to tariff changes affecting Armenia. The tools draw on the structural gravity model.
The first tool estimates the impact on bilateral trade for 5,020 products in a partial equilibrium framework. The second quantifies the general equilibrium impact on bilateral aggregate trade, allowing estimates of trade reallocation and welfare changes. The paper uses these to estimate the impact for Armenia of tariff changes including (i) alignment with the external tariff of the Eurasian Economic Union, (ii) free trade agreements between the Eurasian Economic Union and other economies—Iran and the People's Republic of China, and (iii) loss of beneficiary status for the European Union's Generalised Scheme of Preferences.
- Theoretical and Empirical Frameworks
- Product-Level Estimations of the Trade Elasticity
- Changes in Armenia's Tariffs
- Impact of Tariff Changes on Armenia