A Structural Trade Performance Index (with James Anderson and Mario Larch)

Capitalizing on major developments in the theoretical and empirical trade literature, we propose a novel Structural Trade Performance Index (STPI) with the following properties: (i) STPI is meaningful and informative, e.g., it is comparable to the prominent terms-of-trade (ToT) index; (ii) STPI is representative of a wide class of trade models; (iii) STPI is very easy to construct; (iv) The most comprehensive version of STPI requires only bilateral trade flows data. Thus, STPI offers wide coverage; (v) STPI is normalization-free; (vi) STPI can be constructed at the sectoral level, consistently aggregated across various dimensions and decomposed into informative structural components; (vii) STPI is a structural general equilibrium index that can be used for counterfactual analysis. An application to the World Input-Output Database validates some of STPI’s attractive properties and demonstrates its usefulness for analysis of trade performance across countries and over time.

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