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Economic costs and payoffs of bilateral/regional trade agreements

  • Vollrath, Thomas L.
  • Hallahan, Charles B.

The rapid increase in the number of bilateral and regional free-trade agreements since 1995 is a striking development. The proliferation of these agreements has raised questions among academicians and policymakers about whether they have, in fact, opened markets, created trade, promoted economic growth, and/or distorted trade. This study uses panel data from the 1975-2005 period and the gravity framework to identify the influence of bilateral/regional free-trade agreements on bilateral trade in merchandise, agriculture, and clothing sectors. A benchmark, Heckman sample-selection, and two generalized models, one of which accounts for reciprocal-free-trade-agreement phase-in effects, are used to gauge the impact on partner trade of mutual as well as asymmetric RTA membership.

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File URL: http://purl.umn.edu/49375
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Paper provided by Agricultural and Applied Economics Association in its series 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin with number 49375.

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Date of creation: 2009
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Handle: RePEc:ags:aaea09:49375
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  1. Will Martin & Cong S. Pham, 2008. "Estimating the Gravity Model When Zero Trade Flows are Frequent," Economics Series 2008_03, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.
  2. Joao Santos Silva & Silvana Tenreyro, 2005. "The Log of Gravity," CEP Discussion Papers dp0701, Centre for Economic Performance, LSE.
  3. Laszlo Matyas, 1997. "Proper Econometric Specification of the Gravity Model," The World Economy, Wiley Blackwell, vol. 20(3), pages 363-368, 05.
  4. Thomas L. Vollrath & Mark J. Gehlhar & Charles B. Hallahan, 2009. "Bilateral Import Protection, Free Trade Agreements, and Other Factors Influencing Trade Flows in Agriculture and Clothing," Journal of Agricultural Economics, Wiley Blackwell, vol. 60(2), pages 298-317.
  5. Peter Egger & Michael Pfaffermayr, 2003. "The proper panel econometric specification of the gravity equation: A three-way model with bilateral interaction effects," Empirical Economics, Springer, vol. 28(3), pages 571-580, July.
  6. James E. Anderson & Eric van Wincoop, 2004. "Trade Costs," NBER Working Papers 10480, National Bureau of Economic Research, Inc.
  7. Scott L. Baier & Jeffrey H. Bergstrand, 2005. "Do free trade agreements actually increase members’ international trade?," Working Paper 2005-03, Federal Reserve Bank of Atlanta.
  8. James E. Anderson & Eric van Wincoop, 2001. "Gravity with Gravitas: A Solution to the Border Puzzle," NBER Working Papers 8079, National Bureau of Economic Research, Inc.
  9. Jason H. Grant & Dayton M. Lambert, 2008. "Do Regional Trade Agreements Increase Members' Agricultural Trade?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(3), pages 765-782.
  10. repec:dgr:uvatin:20060072 is not listed on IDEAS
  11. Grant, Jason H. & Lambert, Dayton M., 2005. "Regionalism in World Agricultural Trade: Lessons from Gravity Model Estimation," 2005 Annual meeting, July 24-27, Providence, RI 19269, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  12. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January.
  13. repec:dgr:uvatin:2006072 is not listed on IDEAS
  14. Gibson, Paul R. & Wainio, John & Whitley, Daniel B. & Bohman, Mary, 2001. "Profiles Of Tariffs In Global Agricultural Markets," Agricultural Economics Reports 34055, United States Department of Agriculture, Economic Research Service.
  15. Carsten Kowalczyk & Raymond Riezman, 2009. "Trade Agreements," CESifo Working Paper Series 2660, CESifo Group Munich.
  16. Feenstra, Robert C, 2002. "Border Effects and the Gravity Equation: Consistent Methods for Estimation," Scottish Journal of Political Economy, Scottish Economic Society, vol. 49(5), pages 491-506, December.
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