The Trade Effects of Endogenous Preferential Trade Agreements
TLDR
In this paper, an empirical model that takes into account both that preferential trade agreement membership is endogenous and that the world matrix of bilateral trade flows contains numerous zero entries is presented by means of (possibly two-part) Poisson pseudo-maximum likelihood estimation with endogenous binary indicator variables in the empirical model.Abstract:
Recent work by Anderson and van Wincoop (2003) establishes an empirical modeling strategy which takes full account of the structural, non-(log-)linear impact of trade barriers on trade in new trade theory models. This framework has never been used to evaluate and quantify the role of endogenous preferential trade agreement (PTA) membership for trade. Apart from paying attention to structural modeling of the impact of trade policy on trade, this paper aims at delivering an empirical model which takes into account both that preferential trade agreement membership is endogenous and that the world matrix of bilateral trade flows contains numerous zero entries. These features are treated in an encompassing way by means of (possibly two-part) Poisson pseudo-maximum likelihood estimation with endogenous binary indicator variables in the empirical model.read more
Citations
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