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Revisiting the Effects of Regional Trading Agreements on trade flows with Proper Specification of the Gravity Model

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  • Céline CARRERE

    (Centre d'Etudes et de Recherches sur le Développement International(CERDI))

Abstract

This paper uses a gravity model to assess ex-post regional trade agreements. The model includes 130 countries and is estimated with panel data over the period 1962-1996. The introduction of the correct number of dummy variables allows for identification of Vinerian trade creation and trade diversion effects, while the estimation method takes into account a potential correlation between some of the explanatory variables and the bilateral specific effects introduced in the model, as well as a potential selection bias. In contrast to previous estimates in cross-section, results show that regional agreements have generated a significant increase in trade between members, often at the expense of the rest of the world.

Suggested Citation

  • Céline CARRERE, 2003. "Revisiting the Effects of Regional Trading Agreements on trade flows with Proper Specification of the Gravity Model," Working Papers 200310, CERDI.
    • Handle: RePEc:cdi:wpaper:423
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    2. Martin, Philippe & Mayer, Thierry, 2010. "The geography of conflicts and free trade agreements," CEPR Discussion Papers 7740, C.E.P.R. Discussion Papers.
    3. Guglielmo Caporale & Christophe Rault & Robert Sova & Anamaria Sova, 2009. "On the bilateral trade effects of free trade agreements between the EU-15 and the CEEC-4 countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(3), pages 573-573, October.
    4. Christophe Rault & Robert Sova & Ana Maria Sova, 2009. "Modelling international trade flows between CEEC and OECD countries," Applied Economics Letters, Taylor & Francis Journals, vol. 16(15), pages 1547-1554.
    5. Shujiro Urata & Misa Okabe, 2009. "The Impacts Of Free Trade Agreements On Trade Flows: An Application Of The Gravity Model Approach," World Scientific Book Chapters, in: Christopher Findlay & Shujiro Urata (ed.), Free Trade Agreements In The Asia Pacific, chapter 6, pages 195-239, World Scientific Publishing Co. Pte. Ltd..
    6. Amélie Guillin, 2012. "The impacts of Regional Trade Agreements in force in Europe on trade in services," Economics Bulletin, AccessEcon, vol. 32(1), pages 685-697.
    7. Shingal, ANIRUDH, 2009. "How much do agreements matter for services trade?," MPRA Paper 32815, University Library of Munich, Germany, revised 15 May 2010.
    8. Nguyen Thi Ha TRANG & Nguyen Thi Thanh TAM & Vu Hoang NAM, 2011. "An inquiry into the determinants of Vietnamese product export," Working Papers 08, Development and Policies Research Center (DEPOCEN), Vietnam.
    9. Pedro J. Martinez Edo, 2011. "Reciprocal liberalization: Bilateral, plurilateral or multilateral?," STUDIES IN TRADE AND INVESTMENT, in: United Nations ESCAP (ed.), Trade beyond Doha: Prospects for Asia-Pacific Least Developed Countries, Studies in Trade and Investment 76, chapter 4, pages 60-94, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
    10. Christophe Rault & Robert Sova & Ana Maria Sova, 2008. "The Role of Association Agreements within European Union Enlargement to Central and Eastern European Countries," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 63(03), pages 309-328, September.
    11. Christophe Rault & Guglielmo Maria Caporale & Robert Sova & Anamaria Sova, 2009. "Trade Specialisation And Economic Convergence: Evidence From Two Eastern European Countries," William Davidson Institute Working Papers Series wp959, William Davidson Institute at the University of Michigan.
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    13. Darja Majkovic & Stefan Bojnec & Jernej Turk, 2007. "Development of New Members' EU Trade: Evidence from the Slovenian Agri-Food Sector," Post-Communist Economies, Taylor & Francis Journals, vol. 19(2), pages 209-223.
    14. Olarreaga, Marcelo & Arcand, Jean-Louis & Zoratto, Laura, 2011. "Weak Governments and Trade Agreements," CEPR Discussion Papers 8595, C.E.P.R. Discussion Papers.
    15. Sova, Robert & Sova, Anamaria, 2007. "A fast, easy, and efficient estimator for the trade flux between heterogeneous economies," MPRA Paper 3457, University Library of Munich, Germany.
    16. Kurmanalieva, Elvira & Vinokurov, Evgeny, 2011. "Holding together or falling apart:Results of gravity equation of the CIS trade," MPRA Paper 32003, University Library of Munich, Germany.
    17. Thi Hong Hanh Bui & Qiting Chen, 2017. "An Analysis of Factors Influencing Rice Export in Vietnam Based on Gravity Model," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 8(3), pages 830-844, September.
    18. Scott L. Baier & Jeffrey H. Bergstrand & Peter Egger & Patrick A. McLaughlin, 2008. "Do Economic Integration Agreements Actually Work? Issues in Understanding the Causes and Consequences of the Growth of Regionalism," The World Economy, Wiley Blackwell, vol. 31(4), pages 461-497, April.
    19. Tehseen Ahmed Qureshi & Anwar Shah, 2020. "Trade Agreements and Export Creation: An Empirical Analysis of Pakistan’s Exports at Industry Level," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 25(2), pages 93-118, July-Dec.
    20. Robert SOVA & Ion STANCU & Laurentiu FRATILA & Anamaria SOVA, 2011. "Corporate Social Responsibility and its Macroeconomic Implications," REVISTA DE MANAGEMENT COMPARAT INTERNATIONAL/REVIEW OF INTERNATIONAL COMPARATIVE MANAGEMENT, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 12(1), pages 172-183, March.

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