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The Impact of GATT on International Trade: Evidence from Structural Break Analysis

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  • Suleiman Abu-Bader

    ()
    (Department of Economics, Ben-Gurion University of the Negev)

  • Aamer Abu-Qarn

    ()
    (Department of Economics, Ben-Gurion University of the Negev)

Abstract

In this study we test for structural changes in international trade patterns of 77 countries over the post-WWII period, to examine if they experienced a substantial increase in their trade ratios following major GATT rounds such as the Kennedy Round, or after joining GATT. Our results show that trade ratios of most of these countries exhibited structural breaks in their time paths, however, most of the postbreak paths were below the extrapolated prebreak paths. Furthermore, while the significant break years coincided closely with major regional and international events such as the oil shocks of the 70s and the East-Asian financial crisis in 1997, they occurred far before or after the time of a country's accession to GATT or the time of the major GATT rounds.

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Bibliographic Info

Paper provided by Ben-Gurion University of the Negev, Department of Economics in its series Working Papers with number 239.

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Length: 22 pages
Date of creation: Jul 2007
Date of revision:
Publication status: Published in Applied Econometrics and International Development as: Abu-Bader, S. and Abu-Qarn, A. S. (2008) “The Impact of GATT on International Trade: Evidence from Structural Break Analysis”, Applied Econometrics and International Development, 8(2), pages 23-36.
Handle: RePEc:bgu:wpaper:239

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Keywords: International Trade; Trade Liberalization; Structural Change; Oil Shocks; Kennedy Round; East Asia; Financial Crisis;

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  1. Andrew K. Rose, 1991. "Why Has Trade Grown Faster than Income?," Canadian Journal of Economics, Canadian Economics Association, vol. 24(2), pages 417-27, May.
  2. repec:cup:etheor:v:13:y:1997:i:6:p:818-49 is not listed on IDEAS
  3. Arvind Subramanian & Shang-Jin Wei, 2003. "The WTO Promotes Trade, Strongly But Unevenly," NBER Working Papers 10024, National Bureau of Economic Research, Inc.
  4. Vogelsang, Timothy J., 1997. "Wald-Type Tests for Detecting Breaks in the Trend Function of a Dynamic Time Series," Econometric Theory, Cambridge University Press, vol. 13(06), pages 818-848, December.
  5. Andrew K. Rose, 2002. "Do We Really KNow that the WTO Increases Trade?," Working Papers 182002, Hong Kong Institute for Monetary Research.
  6. Jeffrey D. Sachs & Andrew Warner, 1995. "Economic Reform and the Process of Global Integration," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 1-118.
  7. Andrew K. Rose, 2002. "Do WTO Members have More Liberal Trade Policy?," NBER Working Papers 9347, National Bureau of Economic Research, Inc.
  8. Paul Krugman, 1995. "Growing World Trade: Causes and Consequences," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 327-377.
  9. Perron, Pierre & Vogelsang, Timothy J, 1992. "Nonstationarity and Level Shifts with an Application to Purchasing Power Parity," Journal of Business & Economic Statistics, American Statistical Association, vol. 10(3), pages 301-20, July.
  10. Ben-David, Dan & Papell, David H., 1997. "International trade and structural change," Journal of International Economics, Elsevier, vol. 43(3-4), pages 513-523, November.
  11. Irwin, Douglas A, 1995. "The GATT in Historical Perspective," American Economic Review, American Economic Association, vol. 85(2), pages 323-28, May.
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