Do Customs Union Members Engage In More Bilateral Trade Than Free Trade Agreement Members?
AbstractThis paper provides the first empirical analysis directly comparing the effects of customs unions (CUs) and free trade agreements (FTAs) on members' bilateral trade, while addressing the biases arising from log-linearization of the gravity model and crucial time-invariant unobservables. Since Fiorentino et al. (2007) question the popularity of CUs relative to FTAs, considering the latter to be more practical in the current trading climate, such a comparison seems especially relevant. While Baier and Bergstrand (2007) find an FTA to approximately double membersí bilateral trade after 10 years, it is actually a CU, and not an FTA, which doubles bilateral trade.
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Bibliographic InfoPaper provided by Southern Methodist University, Department of Economics in its series Departmental Working Papers with number 0803.
Date of creation: Jul 2008
Date of revision:
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Postal: Department of Economics, P.O. Box 750496, Southern Methodist University, Dallas, TX 75275-0496
Web page: http://www.smu.edu/economics
Free Trade Agreements; Customs Unions; Gravity Model;
Other versions of this item:
- Jayjit Roy, 2010. "Do Customs Union Members Engage in More Bilateral Trade than Free-Trade Agreement Members?," Review of International Economics, Wiley Blackwell, vol. 18(4), pages 663-681, 09.
- F1 - International Economics - - Trade
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