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Determinants of Trade Policy: Insights from a Structural Gravity Model

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  • Joachim Jarreau

Abstract

This paper studies the impacts and determinants of trade policy: preferential trade agreements and multilateral opening. I estimate sector-level trade elasticities to calibrate a multi-sector Armington model of trade. I then use it to compute the price and real wage impacts of trade policy over 2001–2007, as well as the impacts of hypothetical, nonsigned trade agreements. I find that real wage gains positively predict the probability to sign a preferential agreement. Gains from multilateral opening reduce this probability. Finally, expected production price increases, reflecting market access gains, are a stronger determinant of the signing of PTAs than gains in the form of lower consumption prices.

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  • Joachim Jarreau, 2015. "Determinants of Trade Policy: Insights from a Structural Gravity Model," The World Bank Economic Review, World Bank, vol. 29(suppl_1), pages 155-163.
    • Handle: RePEc:oup:wbecrv:v:29:y:2015:i:suppl_1:p:s155-s163.
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    File URL: http://hdl.handle.net/10.1093/wber/lhv024
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    Cited by:

    1. Kimsanova, Barchynai & Herzfeld, Thomas, 2022. "Policy analysis with Melitz-type gravity model: Evidence from Kyrgyzstan," Journal of Asian Economics, Elsevier, vol. 80(C).
    2. Al Faithrich C. Navarrete & Virgillio M. Tatlonghari, 2018. "An empirical assessment of the effects of the Japan–Philippine Economic Partnership Agreement (JPEPA) on Philippine exports to Japan: a gravity model approach," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 7(1), pages 1-20, December.

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