Template-type: ReDif-Paper 1.0 
Author-Name: Falvey, Rod
Author-Email: rfalvey@bond.edu.au
Author-workplace-name: Bond Business School, Bond University
Author-Name: Foster-McGregor, Neil
Author-Email: foster@merit.unu.edu
Author-workplace-name: UNU-MERIT, Maastricht University
Title: On the relationship between the breadth of PTAs and trade flows
Abstract: This paper uses matching econometrics to extend the literature 
	 investigating the impact of Preferential Trading Arrangements (PTAs) on 
	 goods trade flows. Heterogeneity in PTAs is accounted for through a 
	 'provision count index' derived from data provided in a recent World 
	 Bank study (Hofmann et al, 2017). PTA formation now involves two 
	 separate, sequential decisions - first, whether two trading partners 
	 should form a PTA and, second, if they do, how broad that agreement 
	 should be. We find that our explanatory variables are significant for 
	 both decisions, but often have opposing effects on each. Using our 
	 matched PTA and non-PTA groups of country-pairs, we estimate a dose 
	 response function which indicates that arrangements with few provisions 
	 and arrangements with many provisions do not appear to have a 
	 significant impact on goods trade flows between their members. PTAs in 
	 an intermediate range are shown to have a significant positive effect. 
	 We then relate these outcomes to the actual content of the PTAs using 
	 the concept of 'provision intensity'.
Keywords: Preferential Trade Agreements, Trade Flows, PTA Breadth
Classification-JEL: F10, F15, O24
Series: UNU-MERIT Working Papers
Creation-Date: 20170915
Number: 2017-038
File-URL: https://unu-merit.nl/publications/wppdf/2017/wp2017-038.pdf
File-Format: application/pdf
File-Size: 275 kb
Handle: RePEc:unm:unumer:2017038