Peter Egger, Mario Larch, Kevin E. Staub, Rainer Winkelmann. The Trade Effects of Endogenous Preferential Trade Agreements

Peter Egger, Mario Larch, Kevin E. Staub, Rainer Winkelmann.  The Trade Effects of Endogenous Preferential Trade Agreements

The unprecedented surge of preferential trade liberalization since World War II spurred theoretical and empirical work on the matter alike. Theoretical research illustrated under which conditions preferential trade agreements (PTAs) induce welfare gains for participants.1 Econometric work confirmed that economic and political fundamentals determine preferential trade liberalization through PTA membership very much along the lines hypothesized by economic theory (see Scott L. Baier and Jeffrey H. Bergstrand 2002, 2004, 2009; Christopher S. Magee 2003; Hartmut Egger, Peter Egger, and David Greenaway 2008): PTAs are most likely concluded among large, similarly-sized, non-distant economies which have modern political systems. In part this empirical work has even strived for an identification of causal effects of PTA membership and found that, indeed, PTA membership causes bilateral trade.


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Keywords: Behavioral Economics, Behavioral Finance

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