Partial and general equilibrium impacts of trade digitalization using structural gravity model
The study estimates partial and general equilibrium impacts of trade digitalization on trade flows using data from the UN Trade Digitalization Index (TDI) 2024 and a structural gravity model. This approach, unlike earlier gravity model studies on the topic, allows for the derivation of both trade and welfare effects associated with trade digitalization. Estimated partial equilibrium effects suggest that a 10 percent increase in trade digitalization may increase trade flows by approximately 8 percent globally. Based on the gravity model estimates, a general equilibrium model is constructed.