Year: 2005
Type: report
Abstract: This paper identifies the effects of preferential trade agreements on trade volumes and prices using detailed trade and tariff data.It identifies demand elasticities by developing a difference in differences based method that exploits the fact that the additional wedge driven between consumption patterns in a liberalizing versus a non-liberalizing country is directly related to the tariff reduction.Supply elasticities are identified by using tariffs as instruments for observed quantities.Analysis of world-wide trade data for 5,000 commodities shows that NAFTA and CUSFTA have had a substantial impact on international trade volumes, but a modest effect on prices and welfare.NAFTA and CUSFTA increased North American output and prices in many highly-protected sectors by driving out imports from non-member countries.
DOI: 10.3386/w11059
Author: John Romalis
Institutions: Pennsylvania State University, National Bureau of Economic Research, University of Illinois Urbana-Champaign, University of Michigan, University of Illinois System, University of Chicago, Federal Reserve Bank of New York, Massachusetts Institute of Technology, University of Pennsylvania
Language: English
Topic: Global trade and economics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2073554553