Machine learning in international trade research - evaluating the impact of trade agreements

Holger Breinlich, Valentina Corradi, Nadia Rocha, Michele Ruta, João Santos Silva and Thomas Zylkin

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Modern trade agreements contain a large number of provisions in addition to tariff reductions, in areas as diverse as services trade, competition policy, trade-related investment measures, or public procurement. Existing research has struggled with overfitting and severe multicollinearity problems when trying to estimate the effects of these provisions on trade flows. Building on recent developments in the machine learning and variable selection literature, this paper proposes data-driven methods for selecting the most important provisions and quantifying their impact on trade flows, without the need of making ad hoc assumptions on how to aggregate individual provisions. The analysis finds that provisions related to antidumping, competition policy, technical barriers to trade, and trade facilitation are associated with enhancing the trade-increasing effect of trade agreements.

Keywords: lasso; machine learning; preferential trade agreements; deep trade agreements (search for similar items in EconPapers)
JEL-codes: F14 F15 F17 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2021-06-16
New Economics Papers: this item is included in nep-big, nep-cmp and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://eprints.lse.ac.uk/114379/ Open access version. (application/pdf)

Related works:
Working Paper: Machine Learning in International Trade Research - Evaluating the Impact of Trade Agreements (2022)
Working Paper: Machine learning in international trade research - evaluating the impact of trade agreements (2021)
Working Paper: Machine Learning in International Trade Research ?- Evaluating the Impact of Trade Agreements (2021)
Working Paper: Machine Learning in International Trade Research: Evaluating the Impact of Trade Agreements (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:114379

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