Gravity Approach to the Impact of Crises on MERCOSUR Trade

Germán González and Victoria Giordano
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Germán González: UNS/CONICET
Victoria Giordano: UNS

No 280, Working Papers from Red Nacional de Investigadores en Economía (RedNIE)

Abstract: The proliferation of regional trade agreements (RTAs) and the contagion of crises characterised the pre-pandemic global economy. Both are crucial for developing countries. This paper aimed to provide evidence on the impact of crises on RTAs by studying the behaviour of trade flows and using MERCOSUR as a case study. We based our empirical strategy on a traditional gravity approach, differentiating according to the origin of the crises and the type of exported goods. We confirm that MERCOSUR has been able to mitigate external and domestic shocks, but has exacerbated the effects of regional ones. Our findings point to the difficulties in consolidating the industrialisation process in the context of macroeconomic vulnerability and volatility, even despite the existence of RTAs.

Pages: 21 pages
Date: 2023-10
New Economics Papers: this item is included in nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:aoz:wpaper:280

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