Do Trade Agreements Stimulate International Trade Differently? Evidence from 296 Trade Agreements

35 Pages Posted: 25 Jan 2016

See all articles by Tristan Kohl

Tristan Kohl

University of Groningen - Faculty of Economics and Business

Steven Brakman

University of Groningen - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Harry Garretsen

University of Groningen

Multiple version iconThere are 2 versions of this paper

Date Written: January 2016

Abstract

In a seminal article, Rose (2004) found that the assumed positive impact of the WTO on international trade was questionable. This finding has been scrutinised and modified in subsequent research, using different data sets, econometric methods and separating the WTO from other forms of trade agreements. A key characteristic of the subsequent literature is the rather simplistic way in which trade agreements are treated whereby all trade agreements are lumped together. Trade agreements come, however, in many different forms and shapes. This study addresses these differences in trade agreements. Using a unique database of 296 trade agreements, we distinguish 17 tradeā€related policy domains and indicate whether the agreements contain legally enforceable commitments. This extensive and novel taxonomy of trade agreements enables us to allow for the possible heterogeneity of the impact of trade agreements on international trade. Using a gravity model, we find that trade agreement heterogeneity indeed matters for international trade and that countries experience significant trade increases due to comprehensive trade agreements even if not all participants are in the WTO.

Suggested Citation

Kohl, Tristan and Brakman, Steven and Garretsen, Harry, Do Trade Agreements Stimulate International Trade Differently? Evidence from 296 Trade Agreements (January 2016). The World Economy, Vol. 39, Issue 1, pp. 97-131, 2016. Available at SSRN: https://ssrn.com/abstract=2720671 or http://dx.doi.org/10.1111/twec.12272

Tristan Kohl (Contact Author)

University of Groningen - Faculty of Economics and Business ( email )

P.O. Box 800
Groningen, Groningen 9700 AV
Netherlands

HOME PAGE: http://www.tristankohl.org

Steven Brakman

University of Groningen - Department of Economics ( email )

P.O. Box 800
9700 AV Groningen
Netherlands
+31 50 363 3746 (Phone)
+31 50 363 3730 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Harry Garretsen

University of Groningen ( email )

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