Regional Integration and Dynamic Adjustments: Evidence from a Gross National Product Function for Canada and the United States

Guy Chapda Nana, Jean-Philippe Gervais () and Bruno Larue

MPRA Paper from University Library of Munich, Germany

Abstract: We propose an empirical trade model to test for structural change and dynamic effects induced by free trade agreements for the Canadian and US economies. We estimated a translog Gross National Product (GNP) function along with output and factor shares and tested for structural change (abrupt or gradual) which is endogenously determined by the data. After this, we estimated Stolper-Samuelson (SS) and Rybcynski (R) elasticities, and assessed the stability of their sign and magnitude link to the structural change. The null hypothesis of no structural change is soundly rejected for both countries. For Canada, we found gradual structural change that started prior to the implementation of CUSTA and lasted for several years. In the US case, we found evidence of an abrupt structural change occurring in 1995, a year after NAFTA came into force. More interestingly, several SS and R elasticities experienced sign reversals and a magnification effect over the different sub-periods, implying that the categorization of goods in terms of friends or enemies of labour and capital changed during the transition.

Keywords: GNP function; regional integration; structural change; smooth transition regression; dynamic adjustments. (search for similar items in EconPapers)
JEL-codes: C32 F13 F14 F15 Q11 (search for similar items in EconPapers)
Date: 2010-06-15
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/23389/1/MPRA_paper_23389.pdf original version (application/pdf)

Related works:
Journal Article: Regional integration and dynamic adjustments: Evidence from gross national product functions for Canada and the United States (2012)
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:pra:mprapa:23389

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().