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Asymmetric Effects of Economic Freedom on International Trade Flows

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Author Info

  • Craig A. Depken, II

    (Department of Economics, University of Texas at Arlington, U.S.A.)

  • Robert J. Sonora

    (Department of Economics, Fort Lewis College, U.S.A.)

Abstract

We employ a gravity equation to estimate the effects of economic freedom on U.S. consumer exports and imports for the years 1999 and 2000. Using the newly updated Fraser Institute¡¦s Economic Freedom of the World Index, we find that increased economic freedom in the rest of the world would increase the overall U.S. trade volume. We also consider whether imports and exports are affected asymmetrically with respect to income, transaction costs, and economic freedom. We find considerable differences in how these variables affect imports and exports of consumer goods. Our results also give some insight into how economic freedom might affect the U.S. trade position.

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Bibliographic Info

Article provided by College of Business, and College of Finance, Feng Chia University, Taichung, Taiwan in its journal International Journal of Business and Economics.

Volume (Year): 4 (2005)
Issue (Month): 2 (August)
Pages: 141-155

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Handle: RePEc:ijb:journl:v:4:y:2005:i:2:p:141-155

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Postal: 100 Wenhwa Road, Seatwen, Taichung
Web page: http://www.ijbe.org/
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Related research

Keywords: gravity model; trade flows; trade balance;

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References

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  1. Simon J. Evenett & Wolfgang Keller, 2002. "On Theories Explaining the Success of the Gravity Equation," Journal of Political Economy, University of Chicago Press, vol. 110(2), pages 281-316, April.
  2. Soloaga, Isidro & Alan Wintersb, L., 2001. "Regionalism in the nineties: what effect on trade?," The North American Journal of Economics and Finance, Elsevier, vol. 12(1), pages 1-29, March.
  3. Anderson, James E, 1985. "The Relative Inefficiency of Quotas: The Cheese Case," American Economic Review, American Economic Association, vol. 75(1), pages 178-90, March.
  4. Barro, Robert J, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 407-43, May.
  5. de Haan, Jakob & Sturm, Jan-Egbert, 2000. "On the relationship between economic freedom and economic growth," European Journal of Political Economy, Elsevier, vol. 16(2), pages 215-241, June.
  6. W. Kenn Farr & Richard A. Lord & J. Larry Wolfenbarger, 1998. "Economic Freedom, Political Freedom, and Economic Well-Being: A Causality Analysis," Cato Journal, Cato Journal, Cato Institute, vol. 18(2), pages 247-262, Fall.
  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. repec:cto:journl:v:18:y:1998:i:2:p: is not listed on IDEAS
  9. Holger C. Wolf, 2000. "Intranational Home Bias In Trade," The Review of Economics and Statistics, MIT Press, vol. 82(4), pages 555-563, November.
  10. Jac C. Heckelman, 2002. "On the Measurement of Comparative Economic Freedom across Nations," International Journal of Business and Economics, College of Business, and College of Finance, Feng Chia University, Taichung, Taiwan, vol. 1(3), pages 251-261, December.
  11. 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.
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Cited by:
  1. Imre Ferto & Stefan Bojnec, 2012. "EU Enlargement and Agro-Food Export Performance on EU Market Segments," IEHAS Discussion Papers 1206, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
  2. Joseph Francois & Miriam Manchin, 2007. "Institutions, Infrastructure, and Trade," IIDE Discussion Papers 20070401, Institue for International and Development Economics.
  3. Tingvall, Patrik, 2011. "Dynamic Effects of Corruption on Offshoring," Ratio Working Papers 182, The Ratio Institute.
  4. Yann Duval & Chorthip Utoktham, 2009. "Behind the Border Trade Facilitation in Asia-Pacific: Cost of Trade, Credit Information, Contract Enforcement and Regulatory Coherence," Working Papers 6709, Asia-Pacific Research and Training Network on Trade (ARTNeT), an initiative of UNESCAP and IDRC, Canada..
  5. Craig Depken, 2004. "Market structure and ad valorem taxes: cross-country evidence from the magazine industry," Applied Economics Letters, Taylor & Francis Journals, vol. 11(8), pages 477-481.
  6. Heyman, Fredrik & Gustavsson Tingvall, Patrik, 2012. "The Dynamics of Offshoring and Institutions," Ratio Working Papers 190, The Ratio Institute.
  7. Bengt Söderlund & Patrik Tingvall, 2014. "Dynamic effects of institutions on firm-level exports," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 150(2), pages 277-308, May.
  8. Nabil Chaherli & John Nash, 2013. "Agricultural Exports from Latin America and the Caribbean : Harnessing Trade to Feed the World and Promote Development," World Bank Other Operational Studies 16048, The World Bank.
  9. Ojeaga, Paul & Ogundipe, Adeyemi, 2013. "Trade and Institutions: Evidence from Regional Studies," MPRA Paper 50628, University Library of Munich, Germany.

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