The Trade Effects of Endogenous Preferential Trade Agreements

By Peter H. Egger, Mario Larch, K. E. Staub, R. Winkelmann. Social Science Research Network, 2011

373 citations recorded by the source corpus.

Recent work by Anderson and van Wincoop (2003) establishes an empirical modelling strategy which takes full account of the structural, non-(log-)linear impact of trade barriers on trade in new trade theory models. Structural new trade theory models have never been used to evaluate and quantify the role of endogenous preferential trade agreement (PTA) membership for trade in a way which is consistent with general equilibrium. Apart from this gap, the present 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.

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Citations in the corpus

The causal impact of common native language on international trade: Evidence from a spatial regression discontinuity design: evidence from a spatial regression discontinuity design (2015, unknown): “For instance, Egger and Lassmann (2012) find a coefficient of 0.”
Melting Ice Caps and the Economic Impact of Opening the Northern Sea Route (2018, unknown): “19Following Egger et al. (2011), we instrument preferential trade agreements.”
Economic Integration Agreements, Border Effects, and Distance Elasticities in the Gravity Equation (2015, background): “(2008), or HMR, and Egger et al. (2011), the existence of firm heterogeneity may bias coefficient estimates in gravity equations using aggregate data. One of the advantages of HMR's two-stage approach is that it accounts for zeros, but also for firm heterogeneity, when using aggregate trade flows. H”
Estimating Trade Policy Effects with Structural Gravity (2016, unknown): “Egger et al. (2011) offer a recent IV treatment of the endogeneity of trade agreements in a cross-section setting.”
The costs and benefits of leaving the EU: trade effects (2017, background): “For example, falls in foreign direct investment (FDI) (Wacziarg, 1998) are likely and there may also be reductions in the variety of goods and services (Krugman, 1980), weaker competition (Melitz, 2003), erosion of vertical production chains (Melitz and Redding, 2014), slower technological diffusion”
Economic integration agreements and the margins of international trade (2014, methodology): “They decompose actual goods extensive and intensive margin changes post-agreement also using 4-digit SITC data for goods categories from Feenstra et al. (2005). They find significant evidence of both extensive and intensive margin changes using their modified HK decomposition methodology. Both studi”
Bias and consistency in three-way gravity models (2019, methodology): “Aside from Fernández-Val and Weidner (2016)’s work on two-way nonlinear models, Pesaran (2006), Bai (2009), Hahn and Moon (2006), and Moon andWeidner (2017) have each conducted similar analyses for two-way linear models with interacted individual and time fixed effects.”
The Effects of Financial Development on Foreign Direct Investment (2014, methodology): “These results remain unchanged when we control for the possibility of correlation between the error terms of the two parts as well as for firm heterogeneity using the modification of Helpman et al. (2008)’s approach suggested by Egger et al. (2011).”
Does dialogue work? The effectiveness of labor standards in EU preferential trade agreements (2014, background): “While distance is a key indicator of trade (following the gravity model) and therefore signing PTAs (Baccini and Dur 2012; Egger et al. 2011), it is not directly associated with workers’ rights.26 Following Egger et al., we include three key aspects of PTA participation in the first stage…”
An Advanced Guide to Trade Policy Analysis: The Structural Gravity Model (2016, background): “In order to address the endogeneity of bilateral trade policy, IV treatment is highly recommended (Baier and Bergstrand, 2004; Egger et al., 2011).”
Product Standards and Margins of Trade: Firm Level Evidence (2015, unknown): “Finally, the combination of the results in Tables 4 and 6 (column 2) allows us to replicate the quantiﬁcation exercise in Egger et al. (2011) of the contribution of the different margins to the overall SPS effect.”