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Are Free Trade Agreements Contagious?

Author

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  • Baldwin, Richard
  • Jaimovich, Dany

Abstract

This paper presents empirical evidence on the extent to which FTAs are "contagious", using empirical techniques inspired by the study of contagion in exchange rate crises. Applying a series of different econometric techniques, it tests the null hypothesis that the signing of an FTA between one nation's trade partners has no affect on the probability of the nation signing a new FTA. The hypothesis is tested against other political, economical and geographical determinants of the FTA formation previously stated in the literature, finding evidence that the contagion phenomenon is present in different specifications and samples.

Suggested Citation

  • Baldwin, Richard & Jaimovich, Dany, 2009. "Are Free Trade Agreements Contagious?," CCES Discussion Paper Series 12, Center for Research on Contemporary Economic Systems, Graduate School of Economics, Hitotsubashi University.
    • Handle: RePEc:hit:ccesdp:12
    Note: This version: 09 March 2009
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Contagion Effect; Free Trade Agreements and International Trade;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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