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MERCOSUR in gravity: an accounting approach to analyzing its trade effects

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  • Frederik Stender

    (Ruhr-University Bochum)

Abstract

This paper aims at unveiling the roots of integration-induced trade effects for MERCOSUR. For this purpose, its methodology combines previous dummy-variables- and continuous variable approaches to identifying trade creation and trade diversion effects in a gravity model framework. Applying a straightforward accounting exercise to the integration-induced trade effects which are found for MERCOSUR en bloc, two results are central: Firstly, with sectoral exceptions, I generally identify pure trade creating effects on the import side but also find trade diversion with associate countries when refining extra-bloc country status. Secondly, while extra-bloc import growth seems to be driven predominantly by non-tariff determinants, trade creation in pooled commodity imports for the largest fraction stems from differences in the tariff treatment between trading partners.

Suggested Citation

  • Frederik Stender, 2018. "MERCOSUR in gravity: an accounting approach to analyzing its trade effects," International Economics and Economic Policy, Springer, vol. 15(2), pages 501-522, April.
    • Handle: RePEc:kap:iecepo:v:15:y:2018:i:2:d:10.1007_s10368-017-0400-8
    DOI: 10.1007/s10368-017-0400-8
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    More about this item

    Keywords

    Gravity model of trade; Regional economic integration; Trade creation and trade diversion; Tariff margin; Panel data;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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