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Who Is Benefiting The Most From Nafta? An Intervention Time Series Analysis

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Author Info

  • Rock-Antoine Mehanna

    ()
    (Department of Business Administration & Economics, Wartburg College)

  • Hannarong Shamsub

    ()
    (International College of the Cayman Islands)

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    Abstract

    Unlike previous studies on the North American Free Trade Agreement (NAFTA), which examined either trade or income effects by using forecasted trade values, this paper investigates the impact of NAFTA on both bilateral trade and income of each member country - US, Canada, and Mexico - by using historical data. This paper covers time series data before and after NAFTA was formed, from 1980 to 1999. We consider NAFTA as a prolonged impulse function in international trade activities among the three trading partners by employing an intervention-function model. Findings reveal that NAFTA increases bilateral trade between US-Canada and US-Mexico, and in terms of income, NAFTA benefits Canada the most ¡°certainly¡±. To substantiate these findings, Granger causality analysis is employed, which in turn supports our intervention-function results.

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    Bibliographic Info

    Article provided by Chung-Ang Unviersity, Department of Economics in its journal Journal Of Economic Development.

    Volume (Year): 27 (2002)
    Issue (Month): 2 (December)
    Pages: 69-79

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    Handle: RePEc:jed:journl:v:27:y:2002:i:2:p:69-79

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    Related research

    Keywords: NAFTA; Intervention-function Model; Time Series Analysis; Granger Causality;

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    References

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    1. Gilbert Gagné, 2000. "North American Free Trade, Canada, and US Trade Remedies: An Assessment After Ten Years," The World Economy, Wiley Blackwell, vol. 23(1), pages 77-91, 01.
    2. Markusen, James R. & Rutherford, Thomas F. & Hunter, Linda, 1995. "Trade liberalization in a multinational-dominated industry," Journal of International Economics, Elsevier, vol. 38(1-2), pages 95-117, February.
    3. David Cox & Richard G. Harris, 1992. "North American Free Trade and its Implications for Canada: Results from a CGE Model of North American Trade," The World Economy, Wiley Blackwell, vol. 15(1), pages 31-44, 01.
    4. Patrick J. Kehoe & Timothy J. Kehoe, 1994. "Capturing NAFTA's impact with applied general equilibrium models," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Spr, pages 17-34.
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    Cited by:
    1. Jayanthakumaran, Kankesu & Sanidas, Elias, 2005. "The Impact of Unilateral and Regional Trade Liberalisation on the Intra-ASEAN 5 Founding Nations' Exports and Export-GDP Nexus," Economics Working Papers wp05-14, School of Economics, University of Wollongong, NSW, Australia.

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