EconPapers    
Economics at your fingertips  
 

Free trade agreements and market integration: Evidence from South Korea

Eun Son Lim and Janice Boucher Breuer
Authors registered in the RePEc Author Service: Janice Breuer Bass ()

Journal of International Money and Finance, 2019, vol. 90, issue C, 241-256

Abstract: We consider the effects of free trade agreements on market integration between South Korea and its solo and trade-bloc FTA partners. Free trade agreements should reduce tariffs and trade costs and lead to faster home-to-foreign price convergence. We investigate these ideas with a non-linear self-exciting threshold autoregressive (TAR) model, by introducing a threshold break at the effective FTA date. This strategy allows us to consider: (1) whether trade costs have declined after the free trade agreement; and (2) whether the speed of mean reversion in the home-foreign price differential is faster after the FTA. Our study includes nine of South Korea’s free trade agreements and covers twenty-eight partner countries. We find evidence that after free trade agreements, trade costs have been reduced for nine countries, providing evidence that greater market integration has been achieved on this score. However, evidence on whether the speed of home-to-foreign price convergence increases after free trade agreements is lacking.

Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0261560618305898
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:90:y:2019:i:c:p:241-256

DOI: 10.1016/j.jimonfin.2018.09.010

Access Statistics for this article

Journal of International Money and Finance is currently edited by J. R. Lothian

More articles in Journal of International Money and Finance from Elsevier
Bibliographic data for series maintained by Haili He ().

 
Page updated 2020-05-02
Handle: RePEc:eee:jimfin:v:90:y:2019:i:c:p:241-256