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Gauging The Recent Effects Of The North American Free Trade Agreement

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  • Thompson, Gary D.
  • Cepeda, Ricardo Cavazos

Abstract

The impacts of the North American Free Trade Agreement (NAFTA) on North American trade are described and analyzed using a variant of a gravity model. Controlling for the effects of real gross domestic product (GDP) and real exchange rates, the impacts of NAFTA on trade flows are statistically significant and positive in all but one case. Growth in real GDP has contributed to positive trade flows while real exchange rates have also affected trade flows in statistically discernible ways. In general, manufactured goods as well as machinery and transport equipment have benefited most from NAFTA while agricultural products have displayed less dynamic growth.

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Bibliographic Info

Article provided by Food Distribution Research Society in its journal Journal of Food Distribution Research.

Volume (Year): 33 (2002)
Issue (Month): 01 (March)
Pages:

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Handle: RePEc:ags:jlofdr:27632

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Web page: http://fdrs.ag.utk.edu/
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Keywords: International Relations/Trade;

References

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  1. Baier, Scott L. & Bergstrand, Jeffrey H., 2001. "The growth of world trade: tariffs, transport costs, and income similarity," Journal of International Economics, Elsevier, vol. 53(1), pages 1-27, February.
  2. Alan Deardorff, 1998. "Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?," NBER Chapters, in: The Regionalization of the World Economy, pages 7-32 National Bureau of Economic Research, Inc.
  3. Barry Eichengreen & Douglas A. Irwin, 1998. "The Role of History in Bilateral Trade Flows," NBER Chapters, in: The Regionalization of the World Economy, pages 33-62 National Bureau of Economic Research, Inc.
  4. Anne O. Krueger, 1999. "Trade Creation and Trade Diversion Under NAFTA," NBER Working Papers 7429, National Bureau of Economic Research, Inc.
  5. Rose, Andrew K. & Yellen, Janet L., 1989. "Is there a J-curve?," Journal of Monetary Economics, Elsevier, vol. 24(1), pages 53-68, July.
  6. Bergstrand, Jeffrey H, 1985. "The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence," The Review of Economics and Statistics, MIT Press, vol. 67(3), pages 474-81, August.
  7. Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-16, March.
  8. Khosrow Doroodian & Chulho Jung & Roy Boyd, 1999. "The J-curve effect and US agricultural and industrial trade," Applied Economics, Taylor & Francis Journals, vol. 31(6), pages 687-695.
  9. Peter Egger, . "A Note on the Proper Econometric Specification of the Gravity Equation," WIFO Working Papers 108, WIFO.
  10. Guilkey, David K., 1974. "Alternative tests for a first-order vector autoregressive error specification," Journal of Econometrics, Elsevier, vol. 2(1), pages 95-104, May.
  11. Sanso, Marcos & Cuairan, Rogelio & Sanz, Fernando, 1993. "Bilateral Trade Flows, the Gravity Equation, and Functional Form," The Review of Economics and Statistics, MIT Press, vol. 75(2), pages 266-75, May.
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