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An Oil-Producing State's Ability to Cope after a Regional Free Trade Agreement--The Case of Texas and NAFTA

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  • Vance Ginn
  • Travis Roach

Abstract

This article examines the potential economic effects that the 1994 North American Free Trade Agreement (NAFTA) had on Texas--an oil-producing, large border state. We estimate a five-variable vector autoregressive (VAR) model with quarterly data from January 1976 to March 2011 and construct a structural VAR representation by imposing long-term restrictions to identify U.S. aggregate, oil price, and Texas-specific shocks. After comparing responses to these structural shocks before and after NAFTA, our results suggest that NAFTA contributed to Texas' economy, becoming more resilient to oil price and non-Texas disruptions.

Suggested Citation

  • Vance Ginn & Travis Roach, 2015. "An Oil-Producing State's Ability to Cope after a Regional Free Trade Agreement--The Case of Texas and NAFTA," The International Trade Journal, Taylor & Francis Journals, vol. 29(4), pages 309-336, October.
    • Handle: RePEc:taf:uitjxx:v:29:y:2015:i:4:p:309-336
    DOI: 10.1080/08853908.2015.1054968
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    1. Olivier J. Blanchard & Jordi Galí, 2007. "The Macroeconomic Effects of Oil Price Shocks: Why Are the 2000s so Different from the 1970s?," NBER Chapters, in: International Dimensions of Monetary Policy, pages 373-421, National Bureau of Economic Research, Inc.
    2. Bayoumi, T. & Eichengreen, B., 1994. "One Money or Many? Analysing the Prospects for Monetary Unification in Various Parts of the World," Princeton Studies in International Economics 76, International Economics Section, Departement of Economics Princeton University,.
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    Cited by:

    1. Gittings, R. Kaj & Roach, Travis, 2020. "Who Benefits from a Resource Boom? Evidence from the Marcellus and Utica Shale Plays," Energy Economics, Elsevier, vol. 87(C).

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