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Friday, 26 January 2018

Séminaire Programme III - Bordeaux Développement

vendredi 26 janvier
13h - 14h30
salle F340, site de Pessac


GREThA, Université de Bordeaux

  "Implementation period of trade liberalization and partners characteristics: Do they matter to regional trade agreements?"

AbstractThis paper assesses the ex-post effects of 245 regional trade agreements (RTAs) all over the world based on a gravity model with solid theoretical foundations. The study covers 160 countries over the period of 1960 through 2015. We investigate whether the length of RTAs implementation period and member countries' level of development affect their effect on members' trade. The gravity model is estimated by proper econometric techniques that can handle main problems encountered by empirical literature involving the gravity model. Our results are robust across various gravity model specifications in which we use exporter-year and importer-year fixed effects to account for multilateral resistance terms, country-pair fixed effects to control for the endogeneity of RTAs, and employ PPML estimation to account for heteroskedasticity bias and issues of zero trade flows. The analysis finds that RTAs lead to significant trade creation between members, regardless of the level of development of member countries. RTAs formed by partner countries experiencing similar levels of economic development (North-North trade agreements and South-South trade agreements) result in greater increase in trade among members during a shorter transition period of trade and tariff liberalization than North-South RTAs.