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The WTO Trade Effect

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  • Pao-Li Chang¤
  • Myoung-Jae Lee

Abstract

This paper proposes to reexamine the trade effect of GATT/WTO based on non-parametric econometric techniques. Our estimation framework uses the simplest gravity model that explains bilateral trade volumes with country sizes and trade resistance, without imposing parametric assumptions typically made in gravity-type econometric models. Specifically, matching estimators coupled with permutation tests and signed-rank tests are employed to obtain point and interval estimates. While observable covariates (country sizes and determinants of trade resistance) are controlled for nonparametrically, unobservable selection bias is dealt with by a sensitivity analysis. The results suggest large GATT/WTO effects on trade in both cross-sectional and time-series dimensions, and the results hold regardless of the GATT/WTO indicators (defined by formal membership or de facto participation).

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Bibliographic Info

Paper provided by DEGIT, Dynamics, Economic Growth, and International Trade in its series DEGIT Conference Papers with number c013_027.

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Length: 46 pages
Date of creation: Nov 2008
Date of revision:
Handle: RePEc:deg:conpap:c013_027

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Related research

Keywords: GATT/WTO; treatment effect; matching; permutation test; signed-rank test; sensitivity analysis;

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References

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Citations

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Cited by:
  1. Eicher, Theo S. & Henn, Christian, 2011. "In search of WTO trade effects: Preferential trade agreements promote trade strongly, but unevenly," Journal of International Economics, Elsevier, vol. 83(2), pages 137-153, March.
  2. Jayjit Roy, 2009. "On the Robustness of the Trade-Inducing Effects of Trade Agreements and Currency Unions," Departmental Working Papers 0906, Southern Methodist University, Department of Economics.
  3. Wilhelm Kohler & Gabriel Felbermayr, . "WTO Membership and the Extensive Margin of World Trade: New Evidence," Discussion Papers 09/06, University of Nottingham, GEP.
  4. Christodoulopoulou, Styliani, 2010. "THE Effects of Multilateral Trade Liberalization on the Extensive and the Intensive Margins of Trade," MPRA Paper 29169, University Library of Munich, Germany.
  5. Hayakawa, Kazunobu, 2012. "Impacts of FTA utilization on firm performance," IDE Discussion Papers 366, Institute of Developing Economies, Japan External Trade Organization(JETRO).
  6. Pao-Li Chang & Myoung-Jae Lee, 2010. "The WTO Trade Effect," Working Papers 31-2010, Singapore Management University, School of Economics.
  7. Tristan Kohl & Steven Brakman & Harry Garretsen, 2013. "Do Trade Agreements Stimulate International Trade Differently? Evidence from 296 Trade Agreements," CESifo Working Paper Series 4243, CESifo Group Munich.
  8. Hayakawa, Kazunobu & Kimura, Fukunari, 2014. "How do free trade agreements reduce tariff rates and non-tariff barriers?," IDE Discussion Papers 446, Institute of Developing Economies, Japan External Trade Organization(JETRO).
  9. Juyoung Cheong & Do Won Kwak & Kam Ki Tang, 2013. "WTO Trade Effects and Identification Problems: Why Knowing The Structural Properties of WTO Memberships Matters?," Discussion Papers Series 491, School of Economics, University of Queensland, Australia.
  10. Hur, Jung & Park, Cheolbeom, 2012. "Do Free Trade Agreements Increase Economic Growth of the Member Countries?," World Development, Elsevier, vol. 40(7), pages 1283-1294.

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