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Terms of Trade and Global Efficiency Effects of Free Trade Agreements, 1990-2002

  • James E. Anderson
  • Yoto V. Yotov

This paper infers the terms of trade effects of Free Trade Agreements (FTA's) with the structural gravity model. Using panel data methods to resolve two way causality between trade and FTA's, we estimate direct FTA effects on bilateral trade volume in 2 digit manufacturing goods from 1990-2002. We deduce the terms of trade changes implied by these volume effects for 40 countries plus a rest-of-the-world aggregate. Some gain over 10%, some lose less than 0.2%. Overall, using a novel measure of the change in iceberg melting, global efficiency rises 0.62%.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 17003.

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Date of creation: Apr 2011
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Publication status: published as Anderson, James E. & Yotov, Yoto V., 2016. "Terms of trade and global efficiency effects of free trade agreements, 1990–2002," Journal of International Economics, Elsevier, vol. 99(C), pages 279-298.
Handle: RePEc:nbr:nberwo:17003
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