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Are Free Trade Agreements Contagious?

  • Baldwin, Richard
  • Jaimovich, Dany

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.

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File URL: http://hermes-ir.lib.hit-u.ac.jp/rs/bitstream/10086/17291/1/070ccesDP_12.pdf
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Paper provided by Center for Research on Contemporary Economic Systems, Graduate School of Economics, Hitotsubashi University in its series CCES Discussion Paper Series with number 12.

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Length: 29 p.
Date of creation: Apr 2009
Date of revision:
Handle: RePEc:hit:ccesdp:12
Note: This version: 09 March 2009
Contact details of provider: Postal: 2-1 Naka, Kunitachi City, Tokyo 186-8601
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Web page: http://www.econ.hit-u.ac.jp/~cces/

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  1. Mardi Dungey & Renee Fry & Brenda Gonzalez-Hermosillo & Vance Martin, 2005. "Empirical modelling of contagion: a review of methodologies," Quantitative Finance, Taylor & Francis Journals, vol. 5(1), pages 9-24.
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