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The Economic Impact of Deepening Trade Agreements

Author

Listed:
  • Lionel Fontagné
  • Nadia Rocha
  • Michele Ruta
  • Gianluca Santoni

Abstract

This paper explores the economic impacts of preferential trade agreements, conditional on their level of ambition. We cluster 278 agreements, encompassing 910 provisions over 18 policy areas and estimate the trade elasticity for the different clusters. We then use these elasticities in a series of general equilibrium counterfactual situations for endowment economies, revealing that deepening existing agreements (the intensive margin of regional integration) could boost world trade by 5 percent and world GDP by 1 percent. The expected gains from deepening agreements within or across regions vary depending on the initial depth of agreements and the size of regional markets.

Suggested Citation

  • Lionel Fontagné & Nadia Rocha & Michele Ruta & Gianluca Santoni, 2022. "The Economic Impact of Deepening Trade Agreements," Working papers 866, Banque de France.
    • Handle: RePEc:bfr:banfra:866
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    Cited by:

    1. Bergstrand, Jeffrey H. & Cray, Stephen R. & Gervais, Antoine, 2023. "Increasing marginal costs, firm heterogeneity, and the gains from “deep” international trade agreements," Journal of International Economics, Elsevier, vol. 144(C).
    2. Jeffrey H. Bergstrand & Stephen R. Cray & Antoine Gervais, 2023. "Increasing Marginal Costs, Firm Heterogeneity,and the Gains from "Deep" International Trade Agreements," Cahiers de recherche 23-01, Departement d'économique de l'École de gestion à l'Université de Sherbrooke.

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    More about this item

    Keywords

    Preferential Trade Agreements; Deep Integration; Structural Gravity;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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