The impact of Preferential Trade Agreements on the margins of international trade |
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Authors: | Neil Foster Johannes PoeschlRobert Stehrer |
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Institution: | The Vienna Institute for International Economic Studies - wiiw, Rahlgasse 3, A-1060 Vienna, Austria |
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Abstract: | In this paper we consider the trade creating effects of Preferential Trade Agreements (PTAs) for a large sample of countries within the period 1962-2000. The paper builds upon existing literature by examining whether any significant effects of PTAs occur through a change in the variety of exports (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 extensive margin responds more strongly to the formation of a PTA in larger exporters and for larger country pairs. |
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Keywords: | F10 F15 |
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