MERCOSUR in Gravity: An Accounting Approach to Analyzing Its Trade Effects

Posted: 23 Jul 2015 Last revised: 27 Nov 2017

Date Written: November 22, 2017


This paper aims at unveiling the roots of integration-induced trade effects for MERCOSUR. For this purpose, its methodology combines previous dummy-variables- and continuous variable approaches to identifying trade creation and trade diversion effects in a gravity model framework. Applying a straightforward accounting exercise to the integration-induced trade effects which are found for MERCOSUR en bloc, two results are central: Firstly, with sectoral exceptions, I generally identify pure trade creating effects on the import side but also find trade diversion with associate countries when refining extra-bloc country status. Secondly, while extra-bloc import growth seems to be driven predominantly by non-tariff determinants, trade creation in pooled commodity imports for the largest fraction stems from differences in the tariff treatment between trading partners.

Keywords: Gravity model, regional economic integration, trade creation and trade diversion, tariffs, panel data

JEL Classification: F13, F14, F15

Suggested Citation

Stender, Frederik, MERCOSUR in Gravity: An Accounting Approach to Analyzing Its Trade Effects (November 22, 2017). International Economics and Economic Policy, forthcoming, Available at SSRN: or

Frederik Stender (Contact Author)

Ruhr University of Bochum ( email )

Faculty of Management and Economics
Chair of International Economics
Bochum, 44780

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