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The Trade Effects of Endogenous Preferential Trade Agreements

Listed author(s):
  • Peter Egger
  • Mario Larch
  • Kevin E. Staub
  • Rainer Winkelmann

Structural new trade theory models have never been used to evaluate and quantify the role of preferential trade agreement (PTA) membership for trade in a way which is consistent with general equilibrium. Apart from filling this gap, the present paper aims at delivering an empirical model which takes into account both that PTA membership is endogenous and that the world matrix of bilateral trade flows contains numerous zero entries. These features are treated in an encompassing way by means of (possibly two-part) Poisson pseudomaximum likelihood estimation with endogenous binary indicator variables in the empirical model. (JEL F11, F13, F15)

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/pol.3.3.113
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File URL: http://www.aeaweb.org/aej/pol/data/2009-0168_data.zip
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Article provided by American Economic Association in its journal American Economic Journal: Economic Policy.

Volume (Year): 3 (2011)
Issue (Month): 3 (August)
Pages: 113-143

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Handle: RePEc:aea:aejpol:v:3:y:2011:i:3:p:113-43
Note: DOI: 10.1257/pol.3.3.113
Contact details of provider: Web page: https://www.aeaweb.org/aej-policy
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