ON THE TRADE BALANCE EFFECTS OF FREE TRADE AGREEMENTS BETWEEN THE EU-15 AND THE CEEC-4 COUNTRIES

Guglielmo Maria CAPORALE, (), Christophe Rault (), Robert Aurelian Sova () and Ana Maria SOVA ()
Authors registered in the RePEc Author Service: Anamaria Diana Sova

No wp912, William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan

Abstract: The expansion of regionalism has spawned an extensive theoretical literature analyzing the effects of Free Trade Agreements (FTAs) on trade flows. In this paper we focus on FTAs (also called European agreements) between the European Union (EU-15) and the Central and Eastern European countries (CEEC-4, i.e. Bulgaria, Hungary, Poland and Romania) and model their effects on trade flows by treating the agreement variable as endogenous. Our theoretical framework is the gravity model, and the econometric method used to isolate and eliminate the potential endogeneity bias of the agreement variable is the fixed effect vector decomposition (FEVD) technique.

Keywords: Regionalisation; European integration; Panel data methods. (search for similar items in EconPapers)
JEL-codes: E61 F13 F15 C25 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec, nep-int, nep-mac and nep-tra
Date: 2008-03-01
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