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The Trade Effects of Preferential Arrangements: New Evidence from the Australia Productivity Commission

Author

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  • Dean A. DeRosa

    () (ADR International Ltd)

Abstract

This paper critically examines “new” evidence from the gravity model that indicates the majority of preferential trading arrangements (PTAs) today are predominantly trade diverting. This new evidence on trade diversion was presented in a recent Australia Productivity Commission (APC) working paper. Although no major faults are found in the methodology of the APC study, the present analysis finds the opposite conclusion—that the majority of current PTAs are predominantly trade creating—when a variant of the gravity model formulated by Andrew Rose is applied to upto- date regression data using a variety of econometric methods, including the Tobit regression method employed by the APC study.

Suggested Citation

  • Dean A. DeRosa, 2007. "The Trade Effects of Preferential Arrangements: New Evidence from the Australia Productivity Commission," Working Paper Series WP07-1, Peterson Institute for International Economics.
  • Handle: RePEc:iie:wpaper:wp07-1
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    File URL: https://piie.com/publications/working-papers/trade-effects-preferential-arrangements-new-evidence-australia
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    Cited by:

    1. TN Srinivasan, 2013. "Trends and Impacts of Real and Financial Globalization in the People's Republic of China and India since the 1980s," Asian Development Review, MIT Press, vol. 30(1), pages 1-30, March.

    More about this item

    Keywords

    trade policy; preferential trading arrangements; free trade agreements; gravity models;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

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