Machine Learning in International Trade Research: Evaluating the Impact of Trade Agreements

Holger Breinlich, Valentina Corradi, Nadia Rocha, Michele Ruta, João Santos Silva and Thomas Zylkin

No 9629, Policy Research Working Paper Series from The World Bank

Abstract: Modern trade agreements contain a large number of provisions besides tariff reductions, in areas as diverse as services trade, competition policy, trade-related investment measures, or public procurement. Existing research has struggled with overfitting and severe multicollinearity problems when trying to estimate the effects of these provisions on trade flows. This paper builds on recent developments in the machine learning and variable selection literature to propose novel data-driven methods for selecting the most important provisions and quantifying their impact on trade flows. The proposed methods have the advantage of not requiring ad hoc assumptions on how to aggregate individual provisions and offer improved selection accuracy over the standard lasso. The analysis finds that provisions related to technical barriers to trade, antidumping, trade facilitation, subsidies, and competition policy are associated with enhancing the trade-increasing effect of trade agreements.

Keywords: International Trade and Trade Rules; De Facto Governments; Economics and Finance of Public Institution Development; State Owned Enterprise Reform; Public Sector Administrative and Civil Service Reform; Public Sector Administrative & Civil Service Reform; Democratic Government; Competition Policy; Competitiveness and Competition Policy; Trade Facilitation; Health and Sanitation (search for similar items in EconPapers)
Date: 2021-04-13
New Economics Papers: this item is included in nep-big, nep-cmp and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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http://documents.worldbank.org/curated/en/73078161 ... Trade-Agreements.pdf (application/pdf)

Related works:
Working Paper: Machine Learning in International Trade Research - Evaluating the Impact of Trade Agreements (2022)
Working Paper: Machine learning in international trade research - evaluating the impact of trade agreements (2021)
Working Paper: Machine learning in international trade research - evaluating the impact of trade agreements (2021)
Working Paper: Machine Learning in International Trade Research ?- Evaluating the Impact of Trade Agreements (2021)
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