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Measurement of the Trade Flows between the EU and Mercosur through Gravitation Analysis

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  • Nevena Stancheva
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    Abstract

    This paper discusses the main factors that determine the interregional trade flows between EU and Mercosur. We apply the gravity model framework (cross-section and panel data) to examine the interregional integration effects on the trade volume for the period 1995-2005. The results show that further trade liberalization will be beneficial for both regional blocks. We found evidences for trade creation effect and “death of the distance” effect.

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    Bibliographic Info

    Article provided by Bulgarian Academy of Sciences - Economic Research Institute in its journal Economic Thought.

    Volume (Year): (2007)
    Issue (Month): 6 ()
    Pages: 66-89

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    Handle: RePEc:bas:econth:y:2007:i:6:p:66-89

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    1. Inmaculada Martínez-Zarzoso & Felicitas Nowak-Lehmann, 2003. "Augmented Gravity Model: An Empirical Application to Mercosur-European Union Trade Flows," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 291-316, November.
    2. Laura Serlenga & Yongcheol Shin, 2004. "Gravity Models of the Intra-EU Trade: Application of the Hausman-Taylor Estimation in Heterogeneous Panels with Common Time-specific Factors," ESE Discussion Papers 105, Edinburgh School of Economics, University of Edinburgh.
    3. Jeffrey Frankel & Andrew Rose, 2002. "An Estimate Of The Effect Of Common Currencies On Trade And Income," The Quarterly Journal of Economics, MIT Press, vol. 117(2), pages 437-466, May.
    4. James E. Anderson & Eric van Wincoop, 2000. "Gravity with Gravitas: A Solution to the Border Puzzle," Boston College Working Papers in Economics 485, Boston College Department of Economics.
    5. Christine A. McDaniel & Laurie-Ann Agama, 2003. "The NAFTA Preference and US-Mexico Trade: Aggregate-Level Analysis," The World Economy, Wiley Blackwell, vol. 26(7), pages 939-955, 07.
    6. Anne O. Krueger, 2000. "NAFTA's Effects: A Preliminary Assessment," The World Economy, Wiley Blackwell, vol. 23(6), pages 761-775, 06.
    7. Thierry Warin & Phanindra Wunnava & Hubert P. Janicki, 2005. "Endogenous OCA Theory: Using the Gravity Model to Test Mundell's Intuition," Economics Bulletin, AccessEcon, vol. 28(6), pages A0.
    8. Soloaga, Isidro & Winters, L. Alan, 1999. "Regionalism in the Nineties: What Effect on Trade?," CEPR Discussion Papers 2183, C.E.P.R. Discussion Papers.
    9. Robert C. Feenstra & James R. Markusen & Andrew K. Rose, 2001. "Using the gravity equation to differentiate among alternative theories of trade," Canadian Journal of Economics, Canadian Economics Association, vol. 34(2), pages 430-447, May.
    10. Inmaculada Martínez-Zarzoso & Felicitas Nowak-Lehmann D., 2003. "Augmented gravity model: An empirical application to Mercosur- European trade flows," International Trade 0309019, EconWPA.
    11. Peter Egger, 2002. "An Econometric View on the Estimation of Gravity Models and the Calculation of Trade Potentials," The World Economy, Wiley Blackwell, vol. 25(2), pages 297-312, 02.
    12. Won W. Koo & P. Lynn Kennedy & Anatoliy Skripnitchenko, 2006. "Regional Preferential Trade Agreements: Trade Creation and Diversion Effects ," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 28(3), pages 408-415.
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