The impact of Preferential Trade Agreements on the margins of international trade

Neil Foster-McGregor, Johannes Poeschl and Robert Stehrer
Authors registered in the RePEc Author Service: Johannes Pöschl ()

Economic Systems, 2011, vol. 35, issue 1, 84-97

Abstract: In this paper we consider the trade creating effects of Preferential Trade Agreements (PTAs) for a large sample of countries within the period 1962-2000. The paper builds upon existing literature by examining whether any significant effects of PTAs occur through a change in the variety of exports (the extensive margin) or through a change in the volume of existing products (the intensive margin). To address this issue we employ the commonly used gravity equation as well as a matching approach to deal with potential self-selection problems. Our results indicate that exports respond positively to the formation of a PTA between countries, and that much of this increase in exports occurs along the extensive margin. We also show that the extensive margin responds more strongly to the formation of a PTA in larger exporters and for larger country pairs.

Keywords: Preferential; Trade; Agreements; Intensive; and; extensive; margin; Matching; econometrics; Difference-in-difference (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (36)

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Related works:
Working Paper: The Impact of Preferential Trade Agreements on the Margins of International Trade (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecosys:v:35:y:2011:i:1:p:84-97

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