Regional Trade Agreement Impact

The impact of regional trade agreements on the volatility of growth Aitken ND (1973) The impact of the EEC and EFTA on European trade: a cross-sectional analysis over time. By Econ Rev 63 (5): 881-892 Linneman H (1966) An econometric study on international trade flows. North Holland, Amsterdam Dee P, Gali J (2003) The trade and investment effects of preferential trade agreements. Working Paper NBER No. 10160 Our empirical results confirm that ATRs are in fact associated with less volatility in growth. We also note that partial preferential trade agreements, which are generally flatter agreements, do not have a significant impact on growth volatility, unlike free trade zones and customs union unions. This reinforces the idea that the depth of regional integration is important. In addition, our results support the political credibility channel. A country with weak institutions, ensuring that its trade policy is conducted through a credible international treaty, is likely to have a more credible trade policy, thereby reducing uncertainty. Particularly in the case of agreements involving North-South partners, the effects on reducing growth volatility in developing countries are most pronounced. Roy J. (2010) Do members of the customs union have more bilateral trade relations than members of the free trade agreement? Rev Int Econ 18 (4):663-681 Soete S, Van Hove J (2017) Dissecting the trade effects of European economic integration agreements.

J Econ Integr 32 (1):193-243 Benedictis L, Taglioni D (2011) In: De Benedictis L, Salvatici L (eds) The trade impact of European Union regional policies. Springer Berlin Heidelberg, Berlin, Heidelberg, 55-89. doi.org/10.1007/978-3-642-16564-1_4 [1] See Kpodar and Imam (2016) for details on the empirical model and the definition and sources of variables. We control the level of development, open trade, internal and external shocks and financial instability. On the other hand, RTAs also have peculiarities that, in turn, could reduce the volatility of growth. First, domestic companies with ARR have access to a larger market and could therefore face the demand for new products that could increase their production base. Second, better political coordination within an ATR – the prevalence of a formal international agreement ensures that the external enforcement mechanism set up by an ATR to overcome domestic political pressure – also promotes the implementation of sound macroeconomic policies that lead to more stable growth.