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Trade Liberalization or Oil Shocks: Which Explains Structural Breaks in International Trade Ratios?

Suleiman Abu-Bader () and Aamer S. Abu-Qarn ()

No 227, Working Papers from Ben-Gurion University of the Negev, Department of Economics

Abstract: Ben-David and Papell's (1997) tests for structural breaks in international trade ratios over the post-WWII period revealed that trade ratios exhibited structural breaks in their paths and that postbreak trade averages exceeded prebreak averages. They attributed these breaks to trade liberalization policies executed during the postwar period. We reevaluate their results by comparing the postbreak trade ratios with extrapolated ratios based on the prebreak trend, and testing for structural breaks in the relative prices of imports (exports). We find that oil shocks rather than trade liberalization were the major factor behind the structural breaks in trade ratios.

Keywords: International trade; Trade Liberalization; Structural change; Oil shocks; Kennedy Round (search for similar items in EconPapers)
JEL-codes: C22 F1 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene and nep-int
Date: 2006-12
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Published in Review of International Economics as: Abu-Bader, S. and Abu-Qarn, A. S. (2010) “Trade Liberalization or Oil Shocks: Which Better Explains Structural Breaks in International Trade Ratios?,” Review of International Economics, 18(2), pages 250–264.

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