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Cited by 2,692Global trade and economicsGlobal Trade and CompetitivenessWorld Trade Organization Law

Do free trade agreements actually increase members' international trade?

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Baier, Scott L., Bergstrand, Jeffrey H.·2007·Journal of International Economics
DOI 10.1016/j.jinteco.2006.02.005
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  • RTAs reduce tariffs and NTMs stepwise, and the effects of reduced tariffs and NTMs may take time to materialise.

    “A possible motivation for the 'phasing-in' effects of RTAs is that RTAs reduce tariffs and NTMs stepwise, and the effects of reduced tariffs and NTMs may take time to materialise (see for example Baier & Bergstrand, 2007;Egger et al., 2022).”

    From Estimating the effects of trade agreements: Lessons from 60 years of methods and data (2024) · cites this paper as Baier & Bergstrand, 2007

    Section 4.E says FTAs commonly have phase-in periods of up to 10 years and that their effects on trade can appear with a lag. It does not say that tariffs and non-tariff measures are each reduced stepwise, or specifically attribute the lag to reductions in those measures. Page numbers are not available in our copy. (LLM, conf=0.86)

    Experimental — accuracy not yet measured

  • The leading method to handle endogeneity of RTAs is the use of pair fixed effects proposed by Baier and Bergstrand (2007).

    “Due to its intuitive appeal and easy implementation, the leading method to handle endogeneity of RTAs is due to Baier and Bergstrand (2007), who, consistent with the approach to control unobserved time-invariant heterogeneity with panel data by Wooldridge (2010), propose the use of pair fixed effects (γ ij )”

    From Estimating the effects of trade agreements: Lessons from 60 years of methods and data (2024) · cites this paper as Baier and Bergstrand (2007)

  • Pair fixed effects control for most of the unobserved correlation between endogenous RTAs and the error term in gravity models.

    “propose the use of pair fixed effects (γ ij ), which will control for most of the unobserved correlation between the endogenous RTAs and the error term in gravity models.”

    From Estimating the effects of trade agreements: Lessons from 60 years of methods and data (2024) · cites this paper as Baier and Bergstrand (2007)

  • Baier and Bergstrand (2007) use five-year intervals.

    “For example, Baier and Bergstrand (2007) use five-year intervals, while Olivero and Yotov (2012) experiment with 3-, 4-and 5-year intervals.”

    From Estimating the effects of trade agreements: Lessons from 60 years of methods and data (2024) · cites this paper as Baier and Bergstrand (2007)

  • The RTA effects have fully materialised after around 10-15 years.

    “This is consistent with findings in the literature that the RTA effects have fully materialised after around 10-15 years (see for example Baier & Bergstrand, 2007;Baier & Standaert, 2022;Egger et al., 2022).”

    From Estimating the effects of trade agreements: Lessons from 60 years of methods and data (2024) · cites this paper as Baier & Bergstrand, 2007

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Authors
Baier, S. L., & Bergstrand, J. H.
Affiliations
  • Federal Reserve Bank of Atlanta (US)
  • University of Notre Dame (US)
Corresponding author
Bergstrand, Jeffrey H.
ORCID
Venue
Journal of International Economics
Publisher
Elsevier BV
Published
2007-03
Volume
71
Issue
1
Pages
72-95
ISSN
0022-1996 (ISSN-L)
DOI
10.1016/j.jinteco.2006.02.005
OpenAlex
W2163362767
Cited by
2,692
References
93
Citations by year
2026: 170 · 2025: 186 · 2024: 222 · 2023: 188 · 2022: 171 · 2021: 193 · 2020: 178 · 2019: 140 · 2018: 138 · 2017: 119 · 2016: 116 · 2015: 144 · 2014: 143 · 2013: 124 · 2012: 102
FWCI
110.35
Type
journal article
Language
en
Open access
Licence
www.elsevier.com/tdm/userlicense/1.0/ (tdm)
Locations
  • Journal of International Economics (publishedVersion)
  • SSRN Electronic Journal (acceptedVersion)
  • RePEc: Research Papers in Economics (submittedVersion)
  • Econstor (Econstor) (submittedVersion)
Funders
  • National Science Foundation
  • Clemson University
  • Kellogg Institute for International Studies, University of Notre Dame
Topics
  • Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Global trade and economics
  • Social Sciences › Business, Management and Accounting › Strategy and Management › Global Trade and Competitiveness
  • Social Sciences › Political Science and International Relations › World Trade Organization Law
Keywords
free trade agreements, bilateral trade, gravity model, panel data econometrics, trade policy effects, trade flows

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