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

Arne Nagengast and Yoto Yotov

American Economic Journal: Applied Economics, 2025, vol. 17, issue 1, 271-96

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 percent in our sample). Sensitivity analyses confirm the robustness of our main findings and demonstrate the applicability of our methods across settings. We expect the ETWFE methods to have significant implications for estimates of other policy variables in the trade literature and for gravity regressions on migration and foreign direct investment.

JEL-codes: C23 F14 F15 F16 J82 (search for similar items in EconPapers)
Date: 2025
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Citations: View citations in EconPapers (2)

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Related works:
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)
Working Paper: Staggered difference-in-differences in gravity settings: Revisiting the effects of trade agreements (2023)
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DOI: 10.1257/app.20230089

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