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Identifier to cite or link to this item: https://hdl.handle.net/10086/25885

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Title
On the Trade and Price Effects of Preferential Trade Agreements
Creator
Creator Name
Falvey, Rod Falvey, Rod
Affiliation
Affiliation Name
Bond University
Creator Name
Foster-McGregor, Neil Foster-McGregor, Neil
Affiliation
Affiliation Name
Vienna Institute for International Economics
Key Word
Preferential Trading Arrangements
Gravity Model
Trade Diversion
JEL
F13
F14
Abstract (distribution restricted)
In this paper we extend recent work using the Gravity Model to estimate the trade and price effects of Preferential Trading Arrangements (PTAs), by explicitly taking into account the extent of the preferential access being provided by the importer. This involves specifying a trade model, deriving appropriate PTA variables, appending them to a gravity-type equation and estimating it. We find that relying on the estimated coefficient on a PTA dummy variable overestimates the trade creating effects of PTAs. We also use average tariff and estimated trade cost data to calculate the effects of the PTAs in force in 2006 on trade flows. We show that ignoring the general equilibrium effects of PTA membership greatly distorts the distribution of outcomes.
Publisher
Center for Research on Contemporary Economic Systems, Graduate School of Economics, Hitotsubashi University
Issued Date
2013-09
Language
English(eng)
Resource Type
technical report
Version Type
VoR
Is Part OfRelation -
Related Title
CCES Discussion Paper Series ; No. 51
Number of Pages
29
Appears in Collections
CCES Discussion Paper Series
URL
https://hdl.handle.net/10086/25885