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GTAP Resource #6340

"Trade Agreements and Regulatory Heterogeneity"
by Vogt, Achim

Based on detailed product-level regulatory data on standard-like, technical measures this paper examines how regulatory differences across countries impact trade and the effect of trade agreements. The identification strategy uses border effects in a standard gravity framework to separate the effects of the presence of measures, mostly applied a non-discriminatory basis, and differences in regulation. Considering different assumptions about the properties of the underlying regulatory data we use a cross-sectional, as well as a panel framework. In the former setup a control function approach is used to account for the endogeneity of different levels of trade agreement depth and the role of regulatory differences in trade agreement formation. Early findings suggest that regulatory differences have a positive effect on trade agreement formation, while they, on average, reduce trade, as well as the trade enhancing effect of trade agreements. The latter findings are confirmed in a panel controlling for globalization trends. Furthermore, effects are robust to the inclusion of count measures indicating a clear difference between regulatory heterogeneity and presence of measures. The heterogeneity effect tends to be significantly larger giving further evidence to the importance of fixed costs in trade.

Resource Details (Export Citation) GTAP Keywords
Category: 2021 Conference Paper
Status: Not published
By/In: Presented during the 24th Annual Conference on Global Economic Analysis (Virtual Conference)
Date: 2020
Version: 1
Created: Vogt, A. (4/15/2021)
Updated: Vogt, A. (5/30/2021)
Visits: 368
- Non-Tariff barriers
- Preferential trading arrangements

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