We develop a novel two stage methodology that allows us to study the empirical determinants of the ex post effects of past free trade agreements (FTAs) as well as obtain ex ante predictions for the ...effects of future FTAs. We first identify 908 unique estimates of the effects of FTAs on different trading pairs for the years 1986–2006. We then employ these estimates as our dependent variable in a “second stage” analysis characterizing the heterogeneity in these effects. Interestingly, most of this heterogeneity (∼2/3) occurs within FTAs (rather than across different FTAs), with asymmetric effects within pairs (on exports vs. imports) also playing an important role. Our second stage analysis provides several intuitive explanations behind these variations. Even within the same agreement, FTA effects are weaker for more distant pairs and for pairs with otherwise high levels of ex ante trade frictions. The effects of new FTAs are similarly weaker for pairs with existing agreements already in place. In addition, we are able to relate asymmetries in FTA effects to each country's ability to influence the other's terms of trade. Out-of-sample predictions incorporating these insights enable us to predict direction-specific effects of future FTAs between any pair of countries. A simulation of the general equilibrium effects of TTIP demonstrates the significance of our methods.
Capital controls and trade policy Lloyd, Simon P.; Marin, Emile A.
Journal of international economics,
September 2024, 2024-09-00, Letnik:
151
Journal Article
Recenzirano
How does optimal capital-flow management change with prevailing trade policies? We study the joint optimal determination of capital controls and trade tariffs in a two-country, two-good model with ...trade in goods and assets. Because countries are large in both markets, a country-planner can achieve higher domestic welfare by departing from free trade in addition to levying capital controls, despite the cooperative optimal allocation being efficient. However, time variation in the optimal tariff induces households to over- or under-borrow through its effects on the path of the real exchange rate. As a result, optimal capital controls are generally smaller when trade policy is constrained (i.e., by a Free-Trade Agreement), but, absent retaliation, can be larger depending on the paths of underlying fundamentals.
Purpose
This study attempts to recognize the effects of the Pakistan–China free trade agreements (PCFTA) on promoting trade between the two economies.
Design/methodology/approach
Following the ...concept of revealed comparative advantage (RCA) and free trade agreements, the study first identifies those commodities in which Pakistan and China have a robust RCA and then analyze the effect of PCFTA on the export value of those commodities for the bilateral trade between Pakistan and China. The study used the panel data in which more than the top 150 importers (j) have been selected for each case of Pakistan and China for the period of 2003–2015.
Findings
The study concludes that even with the higher convergence rate, the good RCA does not guarantee a positive effect of the free trade agreement on the commodities.
Originality/value
The study contributes to the existing literature by integrating RCA with the gravity model by adopting a sequential mode for Pakistan–China free trade agreement.
This paper examines the potential effects of Brexit on income inequality in the United Kingdom (UK) and utilizes empirical methods to predict these effects. The study focuses on the impact of trade ...and Foreign Direct Investment (FDI) on income inequality, using macroeconomic data from 1971 to 2019. By employing cointegration techniques and an Error Correction Model (ECM) on annual time series data, the analysis reveals that higher levels of trade have historically reduced income inequality in the UK over the long term. Consequently, changes in trade resulting from Brexit are expected to have a negative influence on the distribution of income and wealth in the UK. On the other hand, the study finds that higher FDI has only had a short-term negative effect on income distribution in the UK.
This work aims to show key provisions and importance of new-generation trade agreements made by the European Union on the example of the agreement with Vietnam. Empirical research centred around an ...agreement signed between the EU and Vietnam, which is the third new-generation trade agreement entered into by the EU with an Asian country, following an agreement with the Republic of Korea and Singapore. The agreement with Vietnam introduced liberalisation covering almost the entire mutual trade (goods), also providing for the liberalisation of services and eliminating certain non-tariff barriers. Due to a word limit applicable to this article, the research into the importance of the agreement to the EU-Vietnam trade relations was limited mainly to trade in goods. Having considered the fact that relatively too short period of time has elapsed since the entry into force of the agreement, it is not possible to comprehensively assess its importance to bilateral trade relations, especially in a long-term perspective. Such research should be continued in the future. In particular, this concerns research into the effects of liberalisation of mutual trade after the end of transition periods applicable to the elimination of barriers to trade – seven years for the European Union and ten years for Vietnam respectively. Following more than a year since the signature of the agreement, it can be claimed that the EU’s imports from Vietnam have increased considerably, which not only led to the greater negative balance of mutual trade, but also resulted in greater trade volumes for selected goods, and consequently, this may entail the elimination of certain barriers to mutual trade on the entry into force of the agreement. In this article, a descriptive and comparative method was employed, domestic and foreign literature sources were used and the provisions of the EU-Vietnam agreement and legal acts of the EU secondary legislation in the form of regulations were referred to.
As of March 2021, Vietnam negotiated and signed the new generation of Free Trade Agreements (FTAs), consisting of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), ...the European-Vietnam Free Trade Agreement (EVFTA), and the Vietnam-Eurasian Economic Union Free Trade Agreement (VN-EAEU FTA). One of the critical issues of these agreements is non-commercial provisions, especially commitments to the elimination of child labor. This study aimed to examine the implementation of the commitment to eliminate child labor in the new generation of FTAs under the principle of pacta sunt servanda and the government's responsibility to comply with international treaties according to the 2013 Constitution. Based on the obligations arising from international treaties, Vietnam must comply with all commitments agreed upon as a state member. As a result, it is necessary to implement suitable solutions to implement these commitments properly, especially the elimination of child labor, according to the three mentioned FTAs. By using comparative and evaluated methods, this study analyzed and commented on the similarities and differences between the Vietnam labor legal system and these three agreements on eliminating child labor. This study indicated relative compatibility between regulations in three FTAs and the Vietnamese legal system. Subsequently, there is a need to improve the effective implementation of these commitments by amending the definition of children, working hours, and classifying violations against the law regarding the employment of workers under 16 years old of coercive labor into the group of crimes and criminal liabilities to commercial legal entities.
KEYWORDS: Child Labor, Free Trade Agreements, Vietnam.
This study investigates the effect of regional trade agreements (RTAs)—including preferential and free trade agreements, customs unions, and common markets—on bilateral tourism flows. We explore ...these effects using a panel gravity data set of 163 destination countries, 171 source countries, and 13,589 country-pairs from 1995 to 2015. This is the first large cross-country study to undertake such an integrated analysis using the gravity framework. Results show that all types of RTAs have a positive and significant effect on bilateral tourism flows. The overall indicator of RTAs that captures the combined effect of all types of RTAs on bilateral tourism flows is also positive and significant, on average, as well as when different regions are separately evaluated. These findings underscore the importance of strong economic integration in fostering international tourism flows. Policies aimed at improving a country’s economic integration with other countries can help promote international tourism flows.
For over 40 years, the gravity equation has been a workhorse for cross-country empirical analyses of international trade flows and — in particular — the effects of free trade agreements (FTAs) on ...trade flows. However, the gravity equation is subject to the same econometric critique as earlier cross-industry studies of U.S. tariff and nontariff barriers and U.S. multilateral imports: trade policy is
not an exogenous variable. We address econometrically the endogeneity of FTAs. Although instrumental-variable and control-function approaches do not adjust for endogeneity well, a panel approach does. Accounting econometrically for the FTA variable's endogeneity yields striking empirical results: the effect of FTAs on trade flows is quintupled. We find that, on average, an FTA approximately
doubles two members' bilateral trade after 10 years.
This paper provides the first cross-section estimates of long-run treatment effects of free trade agreements on members' bilateral international trade flows using (nonparametric) matching ...econometrics. Our nonparametric cross-section estimates of
ex post long-run treatment effects are much more stable across years and have more economically plausible values than corresponding OLS cross-section estimates from typical gravity equations. We provide plausible estimates of the long-run effects of membership in the original European Economic Community (EEC) and the Central American Common Market (CACM) between 1960 and 2000 and the estimates confirm anecdotal reports of these agreements' effectiveness.
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