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Asymmetric Effects of Economic Freedom on International Trade Flows

Author Info

Listed author(s):
  • Craig A. Depken, II

    (Department of Economics, University of Texas at Arlington, U.S.A.)

  • Robert J. Sonora

    (Department of Economics, Fort Lewis College, U.S.A.)

Abstract

We employ a gravity equation to estimate the effects of economic freedom on U.S. consumer exports and imports for the years 1999 and 2000. Using the newly updated Fraser Institute¡¦s Economic Freedom of the World Index, we find that increased economic freedom in the rest of the world would increase the overall U.S. trade volume. We also consider whether imports and exports are affected asymmetrically with respect to income, transaction costs, and economic freedom. We find considerable differences in how these variables affect imports and exports of consumer goods. Our results also give some insight into how economic freedom might affect the U.S. trade position.

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Article provided by College of Business and College of Finance, Feng Chia University, Taichung, Taiwan in its journal International Journal of Business and Economics.

Volume (Year): 4 (2005)
Issue (Month): 2 (August)
Pages: 141-155

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Handle: RePEc:ijb:journl:v:4:y:2005:i:2:p:141-155
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Keywords: gravity model; trade flows; trade balance;

Find related papers by JEL classification:

  • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
  • F14 - International Economics - - Trade - - - Empirical Studies of Trade
  • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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  1. de Haan, Jakob & Sturm, Jan-Egbert, 2000. "On the relationship between economic freedom and economic growth," European Journal of Political Economy, Elsevier, vol. 16(2), pages 215-241, June.
  2. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 407-443.
  3. Soloaga, Isidro & Alan Wintersb, L., 2001. "Regionalism in the nineties: what effect on trade?," The North American Journal of Economics and Finance, Elsevier, vol. 12(1), pages 1-29, March.
  4. W. Kenn Farr & Richard A. Lord & J. Larry Wolfenbarger, 1998. "Economic Freedom, Political Freedom, and Economic Well-Being: A Causality Analysis," Cato Journal, Cato Journal, Cato Institute, vol. 18(2), pages 247-262, Fall.
  5. Holger C. Wolf, 2000. "Intranational Home Bias In Trade," The Review of Economics and Statistics, MIT Press, vol. 82(4), pages 555-563, November.
  6. Anderson, James E, 1985. "The Relative Inefficiency of Quotas: The Cheese Case," American Economic Review, American Economic Association, vol. 75(1), pages 178-190, March.
  7. Robert C. Feenstra & James R. Markusen & Andrew K. Rose, 2001. "Using the gravity equation to differentiate among alternative theories of trade," Canadian Journal of Economics, Canadian Economics Association, vol. 34(2), pages 430-447, May.
  8. Simon J. Evenett & Wolfgang Keller, 2002. "On Theories Explaining the Success of the Gravity Equation," Journal of Political Economy, University of Chicago Press, vol. 110(2), pages 281-316, April.
  9. repec:cto:journl:v:18:y:1998:i:2:p: is not listed on IDEAS
  10. Jac C. Heckelman, 2002. "On the Measurement of Comparative Economic Freedom across Nations," International Journal of Business and Economics, College of Business and College of Finance, Feng Chia University, Taichung, Taiwan, vol. 1(3), pages 251-261, December.
  11. Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-116, March.
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Cited by:

  1. Bengt Söderlund & Patrik Tingvall, 2014. "Dynamic effects of institutions on firm-level exports," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 150(2), pages 277-308, May.
  2. Sonora, Robert, 2014. "Institutions and Economic Performance in Mexican States," MPRA Paper 58368, University Library of Munich, Germany, revised 15 Jun 2014.
  3. Francois, Joseph & Manchin, Miriam, 2013. "Institutions, Infrastructure, and Trade," World Development, Elsevier, vol. 46(C), pages 165-175.
  4. Nabil Chaherli & John Nash, 2013. "Agricultural Exports from Latin America and the Caribbean : Harnessing Trade to Feed the World and Promote Development," World Bank Other Operational Studies 16048, The World Bank.
  5. Stefan Bojnec & Imre Ferto, 2011. "Impacts of research and development on manufacturing trade," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics, vol. 29(1), pages 65-88.
  6. Heyman Fredrik & Tingvall Patrik Gustavsson, 2015. "The Dynamics of Offshoring and Institutions," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 15(4), pages 1975-2016, October.
  7. Ojeaga, Paul & Ogundipe, Adeyemi, 2013. "Trade and Institutions: Evidence from Regional Studies," MPRA Paper 50628, University Library of Munich, Germany.
  8. Tingvall, Patrik, 2011. "Dynamic Effects of Corruption on Offshoring," Ratio Working Papers 182, The Ratio Institute.
  9. Craig Depken, 2004. "Market structure and ad valorem taxes: cross-country evidence from the magazine industry," Applied Economics Letters, Taylor & Francis Journals, vol. 11(8), pages 477-481.
  10. Otrachshenko, Vladimir & Popova, Olga & Tavares, José, 2016. "Psychological costs of currency transition: evidence from the euro adoption," European Journal of Political Economy, Elsevier, vol. 45(C), pages 89-100.
  11. Yann Duval & Chorthip Utoktham, 2009. "Behind-the-Border Trade Facilitation in Asia-Pacific: Cost of Trade, Credit Information, Contract Enforcement and Regulatory Coherence," Working Paper Series 209, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
  12. Imre Ferto & Stefan Bojnec, 2012. "EU Enlargement and Agro-Food Export Performance on EU Market Segments," IEHAS Discussion Papers 1206, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.

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