Empirical Analysis in The Economics of International Trade: Recent Progress and Challenges

This chapter provides an overview of the recent progress and remaining challenges in empirical analysis of the economics of international trade, highlighting applications of the second- and third-generation empirical methods discussed in prior chapters. Notably, the economics of international trade diverges from other fields of economics, such as labor and development, as randomized controlled trials (RCTs), considered reliable in other areas, are often difficult to conduct. Instead, estimation methods using observational data, such as difference in differences (DID) and instrumental variable (IV) estimations, prevail. The chapter categorizes recent econometric studies, moving from DID and IV estimations using observational data to those using natural experiments and RCTs, and touches on simulations as a noneconometric method, concluding with implications drawn from these diverse research approaches.