Determinants of Trade Policy: Insights from a Structural Gravity Model
This paper studies the impacts and determinants of trade policy: preferential trade agreements and multilateral opening. I estimate sector-level trade elasticities to calibrate a multi-sector Armington model of trade. I then use it to compute the price and real wage impacts of trade policy over 2001–2007, as well as the impacts of hypothetical, nonsigned trade agreements. I find that real wage gains positively predict the probability to sign a preferential agreement. Gains from multilateral opening reduce this probability. Finally, expected production price increases, reflecting market access gains, are a stronger determinant of the signing of PTAs than gains in the form of lower consumption prices.
Volume (Year): 29 (2015)
Issue (Month): suppl_1 ()
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