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Gradualism and dynamic trade adjustment: Revisiting the pro-trade effect of free trade agreements

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  • Jung, Benjamin

Abstract

Do pro-trade effects of free trade agreements reflect timing of policy or dynamic trade adjustment? Only the latter involves dynamic welfare gains. I find that dynamic trade adjustment is as important as the immediate impact effect of free trade agreements.

Suggested Citation

  • Jung, Benjamin, 2012. "Gradualism and dynamic trade adjustment: Revisiting the pro-trade effect of free trade agreements," Economics Letters, Elsevier, vol. 115(1), pages 63-66.
    • Handle: RePEc:eee:ecolet:v:115:y:2012:i:1:p:63-66
    DOI: 10.1016/j.econlet.2011.12.013
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    References listed on IDEAS

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    1. Luis Araujo & Emanuel Ornelas, 2005. "Trust-Based Trade," IBMEC RJ Economics Discussion Papers 2005-08, Economics Research Group, IBMEC Business School - Rio de Janeiro.
    2. Benjamin Jung, 2009. "Adjustment Dynamics of Bilateral Trade Flows: Theory and Evidence," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 145(IV), pages 421-442, December.
    3. David Roodman, 2009. "A Note on the Theme of Too Many Instruments," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 71(1), pages 135-158, February.
    4. Baldwin, Richard E, 1992. "Measurable Dynamic Gains from Trade," Journal of Political Economy, University of Chicago Press, vol. 100(1), pages 162-174, February.
    5. Baier, Scott L. & Bergstrand, Jeffrey H., 2007. "Do free trade agreements actually increase members' international trade?," Journal of International Economics, Elsevier, vol. 71(1), pages 72-95, March.
    6. Anderson, T. W. & Hsiao, Cheng, 1982. "Formulation and estimation of dynamic models using panel data," Journal of Econometrics, Elsevier, vol. 18(1), pages 47-82, January.
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    Cited by:

    1. Gabriel Felbermayr & Marina Steininger & Erdal Yalcin, 2017. "Global Impact of a Protectionist U.S. Trade Policy," ifo Forschungsberichte, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 89, October.
    2. Felbermayr, Gabriel & Gröschl, Jasmin & Heiland, Inga, 2022. "Complex Europe: Quantifying the cost of disintegration," Journal of International Economics, Elsevier, vol. 138(C).
    3. Hylke Vandenbussche & William Connell & Wouter Simons, 2022. "Global value chains, trade shocks and jobs: An application to Brexit," The World Economy, Wiley Blackwell, vol. 45(8), pages 2338-2369, August.
    4. George Alessandria & Carter Mix, 2021. "Trade Policy is Real News: Theory and Evidence," International Finance Discussion Papers 1330, Board of Governors of the Federal Reserve System (U.S.).
    5. Felbermayr, Gabriel & Kimura, Fukunari & Okubo, Toshihiro & Steininger, Marina, 2019. "Quantifying the EU-Japan Economic Partnership Agreement," Journal of the Japanese and International Economies, Elsevier, vol. 51(C), pages 110-128.
    6. Gabriel Felbermayr & Marina Steininger, 2017. "Effekte der US-Präsidentschaft Trump – Neuer Protektionismus," FIW Policy Brief series 037, FIW.
    7. Gabriel Felbermayr & Jasmin Katrin Gröschl & Inga Heiland, 2018. "Undoing Europe in a New Quantitative Trade Model," ifo Working Paper Series 250, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    8. Gabriel Felbermayr & Jasmin Katrin Gröschl, 2017. "Free Trade from Lisbon to Vladivostok: Who Gains, Who Loses from a Eurasian Trade Agreement?," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 18(02), pages 52-62, July.
    9. Carter Mix, 2020. "Technology, Geography, and Trade over Time: The Dynamic Effects of Changing Trade Policy," International Finance Discussion Papers 1304, Board of Governors of the Federal Reserve System (U.S.).
    10. Gabriel Felbermayr & Jasmin Katrin Gröschl & Inga Heiland & Martin Braml & Marina Steininger, 2017. "Ökonomische Effekte eines Brexit auf die deutsche und europäische Wirtschaft," ifo Forschungsberichte, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 85, October.
    11. Khan, Shafaat Yar & Khederlarian, Armen, 2021. "How does trade respond to anticipated tariff changes? Evidence from NAFTA," Journal of International Economics, Elsevier, vol. 133(C).
    12. Gabriel Felbermayr & Jasmin Katrin Gröschl, 2017. "Free Trade from Lisbon to Vladivostok," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 70(02), pages 39-50, January.
    13. Gabriel Felbermayr & Devashish Mitra & Rahel Aichele & Jasmin Katrin Gröschl, 2017. "Europe and India: Relaunching a Troubled Trade Relationship," ifo Forschungsberichte, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 80, October.
    14. Erdal Yalcin & Marina Steininger, 2018. "Worldwide Economic Impact of Increasingly Protectionist US Trade Policy," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 71(04), pages 30-38, February.

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    More about this item

    Keywords

    International bilateral trade; Free trade agreements; Trust; Dynamic panel data;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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