Who Benefits from Regional Trade Agreements? The View from the Stock Market
AbstractThe effects of Regional Trade Agreements (RTAs) are disputed. In this paper, we assess these effects using capital market data and an event-study approach, using a daily data set covering a thousand announcements spanning over eighty economies and a hundred RTAs over twenty recent years. We measure the effects of news concerning RTAs on the returns of national stock markets, adjusted for international stock market movements. We then link these excess returns to features of the RTA members and the agreements themselves. We find evidence of the natural trading partner hypothesis; stock markets rise more when RTAs are signed between countries that already engage in high volumes of trade. Stock markets also rise more when poorer countries sign RTAs.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 8566.
Date of creation: Sep 2011
Date of revision:
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Other versions of this item:
- Christoph Moser & Andrew K. Rose, 2011. "Who Benefits from Regional Trade Agreements? The View from the Stock Market," NBER Working Papers 17415, National Bureau of Economic Research, Inc.
- F10 - International Economics - - Trade - - - General
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-09-22 (All new papers)
- NEP-FMK-2011-09-22 (Financial Markets)
- NEP-INT-2011-09-22 (International Trade)
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