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Determinants of Trade Policy: Insights from a Structural Gravity Model


  • Joachim Jarreau


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.

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  • Joachim Jarreau, 2015. "Determinants of Trade Policy: Insights from a Structural Gravity Model," World Bank Economic Review, World Bank Group, vol. 29(suppl_1), pages 155-163.
  • Handle: RePEc:oup:wbecrv:v:29:y:2015:i:suppl_1:p:s155-s163.

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    References listed on IDEAS

    1. Zissimos, Ben, 2017. "A theory of trade policy under dictatorship and democratization," Journal of International Economics, Elsevier, vol. 109(C), pages 85-101.
    2. Acemoglu,Daron & Robinson,James A., 2009. "Economic Origins of Dictatorship and Democracy," Cambridge Books, Cambridge University Press, number 9780521671422, March.
    3. repec:ucp:bkecon:9780226731445 is not listed on IDEAS
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