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Are Free Trade Agreements Contagious?

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  • Richard Baldwin
  • Dany Jaimovich

Abstract

This paper presents empirical evidence on the extent to which FTAs are gcontagioush, using empirical techniques inspired by the study of contagion in exchange rate crises. Applying a series of different econometric techniques, it tests the null hypothesis that the signing of an FTA between one nationfs trade partners has no affect on the probability of the nation signing a new FTA. The hypothesis is tested against other political, economical and geographical determinants of the FTA formation previously stated in the literature, finding evidence that the contagion phenomenon is present in different specifications and samples.

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Bibliographic Info

Paper provided by Institute of Economic Research, Hitotsubashi University in its series Global COE Hi-Stat Discussion Paper Series with number gd09-057.

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Date of creation: Apr 2009
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Handle: RePEc:hst:ghsdps:gd09-057

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Keywords: Contagion Effect; Free Trade Agreements and International Trade;

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