NAFTA's and CUSFTA's Impact on International Trade

John Romalis

No 11059, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper identifies the effects of preferential trade agreements on trade volumes and prices using detailed trade and tariff data. It identifies demand elasticities by developing a difference in differences based method that exploits the fact that the additional wedge driven between consumption patterns in a liberalizing versus a non-liberalizing country is directly related to the tariff reduction. Supply elasticities are identified by using tariffs as instruments for observed quantities. Analysis of world-wide trade data for 5,000 commodities shows that NAFTA and CUSFTA have had a substantial impact on international trade volumes, but a modest effect on prices and welfare. NAFTA and CUSFTA increased North American output and prices in many highly-protected sectors by driving out imports from non-member countries.

JEL-codes: F1 (search for similar items in EconPapers)
Date: 2005-01
Note: ITI
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

Published as Romalis, John. "NAFTA's and CUSFTA's Impact on International Trade." Review of Economics and Statistics 89, 3 (August 2007): 416-35.

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