Econometric Analysis: Effect of Barriers on Trade
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In this analysis we seek to investigate the impact of various import tariffs on trade as a percentage of GDP. Members of the World Trade Organization (WTO) set up defined tariffs to help facilitate trade with one another. There are specific guidelines for joining, namely the equitable tariff limits that disallow discrimination among countries. These universal rates allow for a firm investigation into how tariffs affect trade as percent of GDP, because it assists in diminishing the impact of substitutes among countries that are not apart of WTO. After regressing the countries’ average weighted tariff to their trade percentage of GDP it was concluded that there is a negative correlation between a country's import tariff and the amount of total trade as percent of GDP.