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Asymmetric Effects of Economic Freedom on International Trade Flows

  • 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.)

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
Contact details of provider: Postal: 100 Wenhwa Road, Seatwen, Taichung
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  1. Simon J. Evenett & Wolfgang Keller, 1996. "On Theories Explaining the Success of the Gravity Equation," International Trade 9608001, EconWPA, revised 13 Jun 1997.
  2. Anderson, James E, 1985. "The Relative Inefficiency of Quotas: The Cheese Case," American Economic Review, American Economic Association, vol. 75(1), pages 178-90, March.
  3. 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.
  4. Barro, R.J., 1989. "Economic Growth In A Cross Section Of Countries," RCER Working Papers 201, University of Rochester - Center for Economic Research (RCER).
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  6. Haan, Jakob de & Sturm, Jan-Egbert, 1999. "On the relationship between economic freedom and economic growth," CCSO Working Papers 199903, University of Groningen, CCSO Centre for Economic Research.
  7. 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.
  8. 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.
  9. Holger C. Wolf, 2000. "Intranational Home Bias In Trade," The Review of Economics and Statistics, MIT Press, vol. 82(4), pages 555-563, November.
  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 106-16, March.
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