The Impact of Preferential Trade Agreements on the Margins of International Trade

Neil Foster-McGregor, Johannes Pöschl () and Robert Stehrer

No 70, wiiw Working Papers from The Vienna Institute for International Economic Studies, wiiw

Abstract: In this paper we consider the trade creating effects of Preferential Trade Agreements (PTAs) for a large sample of countries over the period 1960-2000. The paper builds upon the existing literature by examining whether any significant effects of PTAs occur through a change in the variety of exports (i.e. the extensive margin) or through a change in the volume of existing products (the intensive margin). To address this issue we employ the commonly used gravity equation as well as a matching approach to deal with potential self-selection problems. Our results indicate that exports respond positively to the formation of a PTA between countries, and that much of this increase in exports occurs along the extensive margin. We also show that the gains are strongest for larger trading partners, with again much of the benefits occurring along the extensive margin.

Keywords: preferential trade agreements; intensive and extensive margin; matching; difference-in-difference (search for similar items in EconPapers)
JEL-codes: F10 F15 (search for similar items in EconPapers)
Pages: 25 pages including 9 Tables
Date: 2010-09
New Economics Papers: this item is included in nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Published as wiiw Working Paper

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Related works:
Journal Article: The impact of Preferential Trade Agreements on the margins of international trade (2011)
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