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The impact of Preferential Trade Agreements on the margins of international trade

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  • Foster, Neil
  • Poeschl, Johannes
  • Stehrer, Robert

Abstract

In this paper we consider the trade creating effects of Preferential Trade Agreements (PTAs) for a large sample of countries within the period 1962-2000. The paper builds upon existing literature by examining whether any significant effects of PTAs occur through a change in the variety of exports (the extensive margin) or through a change in the volume of existing products (the intensive margin). To address this issue we employ the commonly used gravity equation as well as a matching approach to deal with potential self-selection problems. Our results indicate that exports respond positively to the formation of a PTA between countries, and that much of this increase in exports occurs along the extensive margin. We also show that the extensive margin responds more strongly to the formation of a PTA in larger exporters and for larger country pairs.

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Bibliographic Info

Article provided by Elsevier in its journal Economic Systems.

Volume (Year): 35 (2011)
Issue (Month): 1 (March)
Pages: 84-97

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Handle: RePEc:eee:ecosys:v:35:y:2011:i:1:p:84-97

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Keywords: Preferential Trade Agreements Intensive and extensive margin Matching econometrics Difference-in-difference;

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References

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Citations

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Cited by:
  1. Alessia Amighini & Marco Sanfilippo, 2013. "Impact of South-South FDI and trade on the export upgrading of African economies," RSCAS Working Papers 2013/75, European University Institute.
  2. Balasan, Andrei-Cristian, 2012. "Literature review concerning the relationship between globalization and regionalization in the world economy," MPRA Paper 39746, University Library of Munich, Germany.
  3. Alessandro Nicita & Valentina Rollo, 2013. "Tariff Preferences As A Determinant For Exports From Sub-Saharan Africa," UNCTAD Blue Series Papers 60, United Nations Conference on Trade and Development.
  4. Dick Nuwamanya Kamuganga, 2012. "What Drives Africa's Export Diversification?," IHEID Working Papers 15-2012, Economics Section, The Graduate Institute of International Studies.
  5. Türkcan, Kemal, 2014. "Exports Margins in Austria’s Export Growth," MPRA Paper 53085, University Library of Munich, Germany.
  6. Yue Gao & John Whalley & Yonglei Ren, 2013. "Decomposing China's Export Growth into Extensive Margin, Export Quality and Quantity Effects," CESifo Working Paper Series 4251, CESifo Group Munich.

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