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Trade Liberalization or Oil Shocks: Which Better Explains Structural Breaks in International Trade Ratios?

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  • Suleiman Abu‐Bader
  • Aamer S. Abu‐Qarn

Abstract

Ben‐David and Papell's (1997) tests for structural breaks in trade ratios over the postwar period revealed that trade ratios exhibited structural breaks in their paths and that postbreak trade averages exceeded prebreak averages. They attributed these breaks to trade liberalization measures carried out during this period. We re‐evaluate their results and find that for most countries the averages of actual postbreak ratios were below the averages of the extrapolated prebreak ratios and that a large share of the breaks coincided with the 1970s oil shocks. This would suggest that the oil shocks rather than trade liberalization may account for the breaks.

Suggested Citation

  • Suleiman Abu‐Bader & Aamer S. Abu‐Qarn, 2010. "Trade Liberalization or Oil Shocks: Which Better Explains Structural Breaks in International Trade Ratios?," Review of International Economics, Wiley Blackwell, vol. 18(2), pages 250-264, May.
    • Handle: RePEc:bla:reviec:v:18:y:2010:i:2:p:250-264
    DOI: 10.1111/j.1467-9396.2010.00852.x
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    References listed on IDEAS

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    3. Chen, Shiu-Sheng & Hsu, Kai-Wei, 2012. "Reverse globalization: Does high oil price volatility discourage international trade?," Energy Economics, Elsevier, vol. 34(5), pages 1634-1643.

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