The Impact of Trade Agreements: New Approach, New Insights
IMF Working Papers, June 10, 2016
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Bibliographic details
- Authors: Swarnali A Hannan
- Published: June 10, 2016
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484386521.001
Overview
- Study period: 1983–1995 for 104 country pairs.
- Research question: Ex-post impact of trade agreements on trade flows, complementing ex-ante model results.
- Motivation: Renewed interest following the Trans-Pacific Partnership (TPP); ex-ante models are subject to considerable uncertainties and need complementing with ex-post analysis.
Methodology
- Primary method: Synthetic control methods (SCM).
- Advantage of SCM emphasized: Allows the effect of unobserved confounder to vary with time, addressing selection bias more flexibly than traditional econometric methods that handle only time-invariant unobserved country characteristics.
- Scope: Application of SCM to bilateral trade outcomes across 104 country pairs.
Key findings
- Average export gains: an increase of exports by 80 percentage points over ten years.
- Heterogeneity:
- Export gains are higher when emerging markets have trade agreements with advanced markets.
- All the countries in NAFTA have substantially gained due to NAFTA.
- Trade diversion evidence:
- Some evidence that trade agreements can potentially lead to slight import diversion.
- No evidence of export diversion.
- Interpretation: SCM-based ex-post analysis suggests substantial gains from trade agreements on exports, with larger benefits for certain partner combinations and limited adverse diversion effects.
Subjects and keywords (as presented)
- Subject: Export performance, Exports, Imports, International trade, North American Free Trade Agreement, Trade agreements
- Keywords: country pair, dummy coefficient, export diversion, export gain, export growth, Export performance, exporting country, Exports, Global, Imports, international trade flows, North American Free Trade Agreement, pairs in NAFTA, partner countries' share, presence of trade agreements, synthetic control method, synthetic control methods, Trade agreements, trade cost, trade diversion effect, WP
Source: The Impact of Trade Agreements: New Approach, New Insights, Swarnali A Hannan, IMF Working Papers 2016, Issue 117.
Content in this bundle
- _wp16117 - Section V concludes.