On the Bilateral Trade Effects of Free Trade Agreements between the EU-15 and the CEEC-4 Countries

30 Pages Posted: 3 Nov 2008

See all articles by Christophe Rault

Christophe Rault

IZA Institute of Labor Economics; University of Orleans; CESifo (Center for Economic Studies and Ifo Institute)

Guglielmo Maria Caporale

Brunel University London - Department of Economics and Finance; London South Bank University; CESifo (Center for Economic Studies and Ifo Institute); German Institute for Economic Research (DIW Berlin)

Anamaria Sova

Bucharest Academy of Economic Studies; CES Sorbonne University

Robert Sova

Academy of Economic Studies; Université Paris I Panthéon-Sorbonne - Centre Maison des Sciences Economiques

Multiple version iconThere are 2 versions of this paper

Abstract

The expansion of regionalism has spawned an extensive theoretical literature analysing the effects of Free Trade Agreements (FTAs) on trade flows. In this paper we focus on FTAs (also called European agreements) between the European Union (EU-15) and the Central and Eastern European countries (CEEC-4, i.e. Bulgaria, Hungary, Poland and Romania) and model their effects on trade flows by treating the agreement variable as endogenous. Our theoretical framework is the gravity model, and the econometric method used to isolate and eliminate the potential endogeneity bias of the agreement variable is the fixed effect vector decomposition (FEVD) technique. Our estimation results indicate a positive and significant impact of FTAs on trade flows. This finding is robust to the inclusion in the sample of a group of control countries (specifically Belarus, the Russian Federation and Ukraine) that did not sign an FTA. Besides, we show that trade growth after the FTA agreement with the EU was signed exceeded trade growth of the control group of countries which did not become members.

Keywords: regionalisation, European integration, panel data methods

JEL Classification: E61, F13, F15, C25

Suggested Citation

Rault, Christophe and Rault, Christophe and Caporale, Guglielmo Maria and Sova, Anamaria and Sova, Anamaria and Sova, Robert, On the Bilateral Trade Effects of Free Trade Agreements between the EU-15 and the CEEC-4 Countries. IZA Discussion Paper No. 3782, Available at SSRN: https://ssrn.com/abstract=1293554 or http://dx.doi.org/10.2139/ssrn.1293554

Christophe Rault (Contact Author)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

University of Orleans ( email )

Rue de Blois
BP 6739
LEO, Orleans, Orleans cedex 2 45067
France

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Guglielmo Maria Caporale

Brunel University London - Department of Economics and Finance ( email )

Kingston Lane
Marie Jahoda Building
Uxbridge, Middlesex UB8 3PH
United Kingdom
+44 1895 266713 (Phone)
+44 1895 269770 (Fax)

HOME PAGE: http://www.brunel.ac.uk/about/acad/bbs/bbsstaff/ef_staff/guglielmocaporale/

London South Bank University ( email )

Centre for Monetary and Financial Economics
London
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Anamaria Sova

Bucharest Academy of Economic Studies

6, Romana Square, District 1
Bucharest, 010374
Romania

CES Sorbonne University ( email )

106-112 bd. de l'Hopital, 75647, Paris, cedex 13
Paris
France

Robert Sova

Academy of Economic Studies ( email )

6 Piata Romana, 1-st District, PO 22
Bucharest, 010374
Romania

HOME PAGE: http://www.cig.ase.ro

Université Paris I Panthéon-Sorbonne - Centre Maison des Sciences Economiques

106/112 boulevard de l'Hopital
Paris Cedex 13, 75647
France

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
116
Abstract Views
1,165
Rank
219,984
PlumX Metrics