The Effect of GATT/WTO on Export and Import Price Volatility

31 Pages Posted: 19 Jan 2016

See all articles by Vinh T. H. Cao

Vinh T. H. Cao

Foreign Trade University (FTU)

Lisandra Flach

Ludwig Maximilian University of Munich

Date Written: December 2015

Abstract

Despite much interest and discussion concerning the tradeā€promoting effects of membership in multilateral trade agreements, little is known about the effect of membership on world trade prices. This paper fills this gap by studying the effects of membership on export and import price volatility. We document a surprisingly strong and robust empirical regularity: GATT/WTO membership reduces the volatility of prices over time for both import and export countries, with similar results found for free trade agreements. We show that results are not driven by sample selection or endogeneity concerns and that the effect is captured by members subject to rigorous accession procedures.

Suggested Citation

Cao, Vinh T. H. and Flach, Lisandra, The Effect of GATT/WTO on Export and Import Price Volatility (December 2015). The World Economy, Vol. 38, Issue 12, pp. 2049-2079, 2015. Available at SSRN: https://ssrn.com/abstract=2717214 or http://dx.doi.org/10.1111/twec.12228

Vinh T. H. Cao (Contact Author)

Foreign Trade University (FTU)

91 Chua Lang St
Dong Da District
Hanoi, Hochiminh city 10000
Vietnam

Lisandra Flach

Ludwig Maximilian University of Munich ( email )

Geschwister-Scholl-Platz 1
Munich, Bavaria 80539
Germany

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