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Terms of Trade and Global Efficiency Effects of Free Trade Agreements, 1990-2002

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  • James E. Anderson

    ()
    (Boston College)

  • Yoto V. Yotov

    (Drexel University)

Abstract

This paper infers the terms of trade effects of Free Trade Agreements (FTAs) with the structural gravity model. Using panel data methods to resolve two way causality between trade and FTAs, we estimate direct FTA effects on bilateral trade volume in 2 digit manufacturing goods from 1990-2002. We deduce the terms of trade changes implied by these volume effects for 40 countries plus a rest-of-the-world aggregate. Some gain over 10%, some lose less than 0.2%. Overall, using a novel measure of the change in iceberg melting, global efficiency rises 0.62%.

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Bibliographic Info

Paper provided by Boston College Department of Economics in its series Boston College Working Papers in Economics with number 780.

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Date of creation: 29 Sep 2011
Date of revision: 11 Oct 2011
Handle: RePEc:boc:bocoec:780

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Keywords: Free Trade Agreements; Gravity; Terms of Trade; Coefficient of Resource Utilization;

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References

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Citations

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Cited by:
  1. Nitsch, Volker & Besedes, Tibor, 2013. "Trade Integration and the Fragility of Trade Relationships: A Product Level Perspective," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79977, Verein für Socialpolitik / German Economic Association.
  2. Rod Falvey & Neil Foster-McGregor, 2013. "On the Trade and Price Effects of Preferential Trade Agreements," wiiw Working Papers 102, The Vienna Institute for International Economic Studies, wiiw.
  3. Bergstrand, Jeffrey & Larch, Mario & Yotov, Yoto, 2013. "Economic Integration Agreements, Border Effects, and Distance Elasticities in the Gravity Equation," School of Economics Working Paper Series 2013-7, LeBow College of Business, Drexel University.
  4. Olivier CADOT & Anne-Cécilia DISDIER & Lionel FONTAGNÉ, 2012. "North-South Standards Harmonization and International Trade," Working Papers P42, FERDI.
  5. Benedikt Heid & Mario Larch, 2012. "International Trade and Unemployment: A Quantitative Framework," CESifo Working Paper Series 4013, CESifo Group Munich.
  6. Dai, Mian & Yotov, Yoto V. & Zylkin, Thomas, 2014. "On the trade-diversion effects of free trade agreements," Economics Letters, Elsevier, vol. 122(2), pages 321-325.
  7. María Pía Olivero & Yoto V. Yotov, 2012. "Dynamic gravity: endogenous country size and asset accumulation," Canadian Journal of Economics, Canadian Economics Association, vol. 45(1), pages 64-92, February.
  8. Dai, Mian & Yotov, Yoto & Zylkin, Thomas, 2013. "On the Trade-diversion Effects of Free Trade Agreements," School of Economics Working Paper Series 2013-3, LeBow College of Business, Drexel University, revised 08 Oct 2013.
  9. Cipollina, Maria & Laborde, David & Salvatici, Luca, 2013. "Do Preferential Trade Policies (Actually) Increase Exports? An analysis of EU trade policies," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150177, Agricultural and Applied Economics Association.
  10. James E. Anderson & Catherine A. Milot & Yoto V. Yotov, 2011. "The Incidence of Geography on Canada's Services Trade," NBER Working Papers 17630, National Bureau of Economic Research, Inc.
  11. Anne-Célia Disdier & Lionel Fontagné & Olivier Cadot, 2014. "North-South Standards Harmonization and International Trade," Post-Print hal-00975529, HAL.
  12. Alberto Behar & Benjamin D. Nelson, 2012. "Trade Flows, Multilateral Resistance, and Firm Heterogeneity," IMF Working Papers 12/297, International Monetary Fund.
  13. Sami Bensassi & José de Sousa & Joachim Jarreau, 2013. "Preferential Trade Agreements Proliferation: Sorting out the Effects," Working Papers 2013-04, CEPII research center.
  14. Robert C. Johnson & Guillermo Noguera, 2012. "Fragmentation and Trade in Value Added over Four Decades," NBER Working Papers 18186, National Bureau of Economic Research, Inc.

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