Terms-of-Trade Impacts of Trade Agreements and the Choice of Trade Policy

Joachim Jarreau

No 1430, AMSE Working Papers from Aix-Marseille School of Economics, France

Abstract: This paper studies the impacts and determinants of trade policy. I use data on applied tariff protection of world countries over 2001-2007 to estimate sector-level trade elasticities. I then calibrate a structural gravity model of world trade. I compute the impacts of trade agreements which were implemented and of those which were not. I find that expected real income gains predict the signing of PTAs. Decomposing these gains shows that domestic mill price increases, reflecting market access gains, have a larger impact than the impact on the consumer price index. I also find that larger expected gains from multilateral liberalization reduce the probability to engage in preferential agreements.

Keywords: international trade; preferential trade agreements; counter-factual estimation; trade creation and diversion (search for similar items in EconPapers)
JEL-codes: F12 F13 F47 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2014-07-11, Revised 2014-07-11
New Economics Papers: this item is included in nep-int
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Working Paper: Terms-of-Trade Impacts of Trade Agreements and the Choice of Trade Policy (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:aim:wpaimx:1430

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