Do free trade agreements actually increase members' international trade?

• 成果类型: Article
• 署名作者: Baier, Scott L.; Bergstrand, Jeffrey H.
• 署名单位: University of Notre Dame; Federal Reserve System - USA; Federal Reserve Bank - Atlanta; Clemson University; University of Notre Dame
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2006.02.005
• 发表日期: 2007
• 页码: 72-95
• 关键词: Free trade agreements; International Trade Flows; gravity equation

摘要

For over 40 years, the gravity equation has been a workhorse for cross-country empirical analyses of international trade flows and -in particular- the effects of free trade agreements (FTAs) on trade flows. However, the gravity equation is subject to the same econometric critique as earlier cross-industry studies of U.S. tariff and nontariff barriers and U.S. multilateral imports: trade policy is not an exogenous variable. We address econometrically the endogeneity of FTAs. Although instrumental-variable and control-function approaches do not adjust for endogeneity well, a panel approach does. Accounting econometrically for the FTA variable's endogeneity yields striking empirical results: the effect of FTAs on trade flows is quintupled. We find that, on average, an FTA approximately doubles two members' bilateral trade after 10 years. (c) 2006 Elsevier B.V. All rights reserved.