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The literature measuring the impact of Preferential Trade Agreements (PTA) and WTO membership on trade flows has produced remarkably diverse results. Rose's (2004) seminal paper reports a range of specifications that show no WTO effects, but Subramanian and Wei (2007) contend that he does not fully control for multilateral resistance (which could bias WTO estimates). Subramanian and Wei (2007) address multilateral resistance comprehensively to report strong WTO trade effects for industrialized countries but do not account for unobserved bilateral heterogeneity (which could inflate WTO estimates). We unify these two approaches by accounting for both multilateral resistance and unobserved bilateral heterogeneity, while also allowing for individual trade effects of PTAs. WTO effects vanish and remain insignificant throughout once multilateral resistance, unobserved bilateral heterogeneity, and individual PTA effects are introduced. The result is robust to the use of alternative definitions and coding conventions for WTO membership that have been employed by Rose (2004), Tomz et al. (2007), or by Subramanian and Wei's (2007).

Commerce --- Business & Economics --- International Commerce --- Terms of trade. --- Tariff preferences. --- Differential duty --- Discriminating duty --- Generalized system of preferences (Tariff) --- GSP (Tariff) --- Preferences, Tariff --- Preferential duty --- Preferential tariff --- Trade preferences --- Tariff --- Competition, International --- Prices --- Exports and Imports --- Trade Policy --- International Trade Organizations --- Empirical Studies of Trade --- Trade: General --- International economics --- Trade agreements --- Trade balance --- Plurilateral trade --- Imports --- North American Free Trade Agreement --- Commercial treaties --- Balance of trade --- International trade --- Luxembourg

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Zonder onderwerpscode: economie

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Economic growth --- Economic development --- Income distribution --- AA / International- internationaal --- 331.31 --- 330.35 --- 338.8 --- Income distribution. --- 339.21 --- Development, Economic --- Growth, Economic --- Economic policy --- Economics --- Statics and dynamics (Social sciences) --- Development economics --- Resource curse --- Distribution of income --- Income inequality --- Inequality of income --- Distribution (Economic theory) --- Disposable income --- 330.35 Economische groei. Kwantitatieve toename. Technische vooruitgang --zie ook {338.09} --- Economische groei. Kwantitatieve toename. Technische vooruitgang --zie ook {338.09} --- Economisch beleid. --- Economische groei. --- Ongelijkheid en herverdeling van vermogens en inkomens. Inkomensbeleid. --- Economisch beleid --- Economische groei --- Ongelijkheid en herverdeling van vermogens en inkomens. Inkomensbeleid

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The introduction of the euro generated substantial interest in measuring the impact of currency unions (CUs) on trade flows. Rose's (2000) initial estimates suggested a tripling of trade and created a literature in search of "more reasonable" CU effects. A recent meta-analysis of this literature shows that subsequent papers quantify CU trade impacts at 30-90 percent. However, most recent studies use shorter time series and fewer countries than Rose in his original work. We revisit Rose's original benchmark, extend the dataset, and address Baldwin's (2006) critiques regarding the proper specification of gravity models in large panels by simultaneously accounting for multilateral resistance and unobserved bilateral heterogeneity. This produces a robust average CU trade effect of 45 percent. Yet, the trade impacts of individual CUs vary substantially and are generally lower than those of preferential trade agreements (PTAs). Our revised benchmark can be used as a yardstick for future studies to delineate how estimates differ due to new data or differences in econometric specifications.

Free trade. --- Monetary unions. --- Tariff. --- Finance --- Business & Economics --- International Finance --- Free trade and protection --- Trade, Free --- Trade liberalization --- Ad valorem tariff --- Border taxes --- Customs (Tariff) --- Customs duties --- Duties --- Fees, Import --- Import controls --- Import fees --- Tariff on raw materials --- Common currencies --- Currency areas --- Currency unions --- Optimum currency areas --- International trade --- Commercial policy --- Indirect taxation --- Revenue --- Customs administration --- Favored nation clause --- Non-tariff trade barriers --- Reciprocity (Commerce) --- Currency question --- Money --- Exports and Imports --- Foreign Exchange --- Trade Policy --- International Trade Organizations --- Financial Aspects of Economic Integration --- International economics --- Currency --- Foreign exchange --- Plurilateral trade --- Monetary unions --- Exchange rates --- Multilateral trade --- United States