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Have US-Japan Trade Agreements Made a Difference?

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  • Byron Gangnes

    ()
    (Department of Economics, University of Hawaii at Manoa)

  • Craig Parsons

    (Department of Economics, Yokohama National University)

Abstract

The few existing empirical studies of U.S.-Japan trade agreements have relied primarily on descriptive statistics or univariate time series methods. We conduct a more powerful test by evaluating agreements in the context of well-specified econometric models. Consistent with trade theory, import demand is modeled as a cointegrating relationship with income and relative price variables, where a trade agreement may cause a structural break in the cointegrating vector. In several cases, we find evidence that market-opening trade agreements may have increased the volume of Japanese imports, while other agreements appear to have had no significant impact.

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File URL: http://www.economics.hawaii.edu/research/workingpapers/WP_04-3.pdf
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Bibliographic Info

Paper provided by University of Hawaii at Manoa, Department of Economics in its series Working Papers with number 200403.

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Length: 28 pages
Date of creation: Mar 2004
Date of revision:
Handle: RePEc:hai:wpaper:200403

Note: Also Singapore Management University Economics and Statistics Working Paper No. 08-2004, March 2004
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Keywords: Structural break test; U.S.-Japan trade agreements; import promotion policies;

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