@TechReport{dp-664,
  author   = {Gnutzmann, Hinnerk and Gnutzmann-Mkrtchyan, Arevik},
  astring  = {Hinnerk Gnutzmann and Arevik Gnutzmann-Mkrtchyan},
  title    = {The Cost of Borders: Evidence from the Eurasian Customs Union},
  month    = {January},
  year     = {2020},
  pages    = {30},
  size     = {586},
  number   = {664},
  language = {en},
  keywords = {trade facilitation; non-tariff trade costs; customs union; border effects; structural gravity},
  jelclass = {F14, F15, F55},
  abstract = {
How strongly can the reduction in bureaucracy and red tape at the border increase trade? To address this, we study an ambitious trade facilitation policy -- the complete abolition of internal customs controls -- in the Eurasian Customs Union. Using a structural gravity model with high-dimensional fixed effects, we find evidence that non-tariff trade facilitation strongly and robustly increases the number of newly traded products. The value of trade, however, reacts more strongly to a traditional tariff-driven diversion of trade towards union members. Trade facilitation policies can diversify bilateral trade, highlighting the importance of trade analysis at the extensive margin.
}}