Staggered Difference-in-Differences in Gravity Settings: Revisiting the Effects of Trade Agreements

Arne Nagengast and Yoto Yotov

No 10782, CESifo Working Paper Series from CESifo

Abstract: We nest an extended two-way fixed effect (ETWFE) estimator for staggered difference-in-differences within the structural gravity model. To test the ETWFE, we estimate the effects of regional trade agreements (RTAs). The results suggest that RTA estimates in the current gravity literature may be biased downward (by more than 50% in our sample). Sensitivity analyses confirm the robustness of our main findings and demonstrate the applicability of our methods in different settings. We expect the ETWFE methods to have significant implications for the estimates of other policy variables in the trade literature and for gravity regressions on migration and FDI flows.

Keywords: staggered difference-in-differences; gravity model; trade agreements (search for similar items in EconPapers)
JEL-codes: C13 C23 F10 F13 F14 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-int and nep-inv
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Staggered Difference-in-Differences in Gravity Settings: Revisiting the Effects of Trade Agreements (2025)
Working Paper: Staggered Difference-in-Differences in Gravity Settings: Revisiting the Effects of Trade Agreements (2023)
Working Paper: Staggered difference-in-differences in gravity settings: Revisiting the effects of trade agreements (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_10782

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