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Cointegration, error correction mechanism and trade liberalization: the case of the Spanish imports of manufactures

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  • Marcos Sanso
  • Antonio Montanes

Abstract

This paper discusses the way that the effects of a tariff cut process on trade flows should be analysed when the variables are nonstationary. Using cointegration techniques and the error correction mechanism, it is possible to establish the different types of structural break that might appear in the behaviour of a trade flow as a consequence of the trade liberalization process, both in the short and in the long-run. In order to illustrate the results, the evolution of the Spanish imports of manufacturers after Spain's entry into the European Community is analysed.

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  • Marcos Sanso & Antonio Montanes, 2002. "Cointegration, error correction mechanism and trade liberalization: the case of the Spanish imports of manufactures," Applied Economics, Taylor & Francis Journals, vol. 34(2), pages 231-240.
    • Handle: RePEc:taf:applec:v:34:y:2002:i:2:p:231-240
    DOI: 10.1080/00036840110036314
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    Cited by:

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    2. Lord, Montague, 2004. "Partial-Equilibrium and Industrial-Shift Analysis of the U.S.–Colombia FTA," MPRA Paper 50635, University Library of Munich, Germany.
    3. Cortes, Maria, 2007. "Examining Patterns of Bilateral Trade between Australia and Colombia by Using Cointegration Analysis and Error-Correction Models," Economics Working Papers wp07-20, School of Economics, University of Wollongong, NSW, Australia.

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