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Revisiting the Effects of Regional Trading Agreements on trade flows with Proper Specification of the Gravity Model

Author

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  • Céline CARRERE

    () (Centre d'Etudes et de Recherches sur le Développement International(CERDI))

Abstract

This paper uses a gravity model to assess ex-post regional trade agreements. The model includes 130 countries and is estimated with panel data over the period 1962-1996. The introduction of the correct number of dummy variables allows for identification of Vinerian trade creation and trade diversion effects, while the estimation method takes into account a potential correlation between some of the explanatory variables and the bilateral specific effects introduced in the model, as well as a potential selection bias. In contrast to previous estimates in cross-section, results show that regional agreements have generated a significant increase in trade between members, often at the expense of the rest of the world.

Suggested Citation

  • Céline CARRERE, 2003. "Revisiting the Effects of Regional Trading Agreements on trade flows with Proper Specification of the Gravity Model," Working Papers 200310, CERDI.
  • Handle: RePEc:cdi:wpaper:423
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Guglielmo Caporale & Christophe Rault & Robert Sova & Anamaria Sova, 2009. "On the bilateral trade effects of free trade agreements between the EU-15 and the CEEC-4 countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(2), pages 189-206, July.
    2. Scott L. Baier & Jeffrey H. Bergstrand & Peter Egger & Patrick A. McLaughlin, 2008. "Do Economic Integration Agreements Actually Work? Issues in Understanding the Causes and Consequences of the Growth of Regionalism," The World Economy, Wiley Blackwell, vol. 31(4), pages 461-497, April.
    3. Amélie Guillin, 2012. "The impacts of Regional Trade Agreements in force in Europe on trade in services," Economics Bulletin, AccessEcon, vol. 32(1), pages 685-697.
    4. Guglielmo Maria Caporale & Christophe Rault & Robert Sova & Anamaria Sova, 2009. "Trade Specialisation and Economic Convergence: Evidence from Two Eastern European Countries," Discussion Papers of DIW Berlin 875, DIW Berlin, German Institute for Economic Research.
    5. Pedro J. Martinez Edo, 2011. "Reciprocal liberalization: Bilateral, plurilateral or multilateral?," STUDIES IN TRADE AND INVESTMENT, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
    6. Llanto, Gilberto M. & Quimba, Francis Mark A. & Sombilla, Mercedita A., 2012. "Interregional Trade of High-value Fruits and Vegetables: Issues on Transport and Shipping," Discussion Papers DP 2012-08, Philippine Institute for Development Studies.
    7. repec:spr:jknowl:v:8:y:2017:i:3:d:10.1007_s13132-015-0279-y is not listed on IDEAS
    8. Sova, Robert & Sova, Anamaria, 2007. "A fast, easy, and efficient estimator for the trade flux between heterogeneous economies," MPRA Paper 3457, University Library of Munich, Germany.
    9. Christophe Rault & Robert Sova & Ana Maria Sova, 2009. "Modelling international trade flows between CEEC and OECD countries," Applied Economics Letters, Taylor & Francis Journals, vol. 16(15), pages 1547-1554.
    10. URATA Shujiro & OKABE Misa, 2007. "The Impacts of Free Trade Agreements on Trade Flows: An Application of the Gravity Model Approach," Discussion papers 07052, Research Institute of Economy, Trade and Industry (RIETI).
    11. Kurmanalieva, Elvira & Vinokurov, Evgeny, 2011. "Holding together or falling apart:Results of gravity equation of the CIS trade," MPRA Paper 32003, University Library of Munich, Germany.
    12. Christophe Rault & Robert Sova & Ana Maria Sova, 2008. "The Role of Association Agreements within European Union Enlargement to Central and Eastern European Countries," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 63(03), pages 309-328, September.
    13. Shingal, ANIRUDH, 2009. "How much do agreements matter for services trade?," MPRA Paper 32815, University Library of Munich, Germany, revised 15 May 2010.
    14. Martin, Philippe & Mayer, Thierry & Thoenig, Mathias, 2010. "The geography of conflicts and free trade agreements," CEPREMAP Working Papers (Docweb) 1019, CEPREMAP.
    15. Robert SOVA & Ion STANCU & Laurentiu FRATILA & Anamaria SOVA, 2011. "Corporate Social Responsibility and its Macroeconomic Implications," REVISTA DE MANAGEMENT COMPARAT INTERNATIONAL/REVIEW OF INTERNATIONAL COMPARATIVE MANAGEMENT, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 12(1), pages 172-183, March.
    16. Arcand, Jean-Louis & Olarreaga, Marcelo & Zoratto, Laura, 2011. "Weak Governments and Trade Agreements," CEPR Discussion Papers 8595, C.E.P.R. Discussion Papers.

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