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Do Trade Costs Affect the Extensive Margin of Trade? Lessons from U.S. Fresh Fruits and Vegetables Imports

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  • Hejazi, Mina
  • Grant, Jason

Abstract

Recent empirical studies have estimated the trade flow effect of membership in the World Trade Organization (WTO) and its predecessor, the General Agreement on Tariffs and Trade (GATT). One important, although largely untested, conclusion from this literature is that the GATT/WTO works well if we ignore trade in agriculture - one of the institution’s seemingly apparent failures. This article investigates this conclusion using a large panel of agricultural and non-agricultural trade flows. The results are impressive: the multilateral institution has delivered significant positive effects on members’ agricultural trade despite its sensitive nature and the reluctance of members to undertake serious reform. These findings are robust to various slices of the data and recent advances in the specification and estimation of the gravity equation to account for sample selection issues and the extensive margin of trade.

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Bibliographic Info

Paper provided by Agricultural and Applied Economics Association in its series 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. with number 150226.

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Date of creation: 2013
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Handle: RePEc:ags:aaea13:150226

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Keywords: agricultural trade; GATT; WTO; gravity equation; panel data; intensive and extensive margin; Agricultural and Food Policy; International Development; International Relations/Trade; F13; Q17;

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