Trade (Dis)Integration: The Sudden Death of NAFTA
16 Pages Posted: 24 May 2018 Last revised: 21 Sep 2018
Date Written: May 13, 2018
This paper uses a PVAR model to study the macroeconomic effects of trade disintegration among NAFTA members. The results reveal substantial asymmetric responses, showing that the US is the most affected economy from a sudden negative trade integration shock. Moreover, Canada and the US are found to be relatively more interconnected with each other compared to the Mexican economy. Our findings question the US decision to push for the renegotiation of the NAFTA agreement.
Keywords: NAFTA, Trade Integration, PVAR Model
JEL Classification: F14, F15, C33
Suggested Citation: Suggested Citation