Recent theoretical findings in the trade literature suggest that economic integration agreements (EIAs) not only increase the level of trade but also make it more stable and predictable. This paper proposes a Hausman–Taylor quantile regression approach to identify the causal effect of EIA membership on trade predictability. The proposed methodology accounts for group effects in the gravity equation and is computationally efficient. Our results corroborate the theoretical findings that EIAs make trade more stable and predictable and this conclusion is even stronger for deeper EIAs.

Résumé

Les accords d’intégration économique ont-ils une incidence sur la prévisibilité du commerce? Analyse d’un effet de groupe. Dans la littérature ayant trait au commerce, de récentes découvertes théoriques suggèrent que les accords d’intégration économique (AIE) permettent non seulement d’augmenter le volume des échanges, mais également de les rendre plus stables et prévisibles. Afin d’identifier le lien de causalité entre l’adhésion à un AIE et la prévisibilité des échanges commerciaux, cet article propose une approche de régression quantile type Hausman–Taylor. La méthodologie proposée tient compte des effets de groupe dans l’équation de gravité et s’avère efficace d’un point de vue computationnel. Nos résultats corroborent les découvertes théoriques stipulant que les AIE rendent le commerce plus stable et plus prévisible, et cette conclusion s’affirme davantage pour les accords d’intégration économique approfondis.

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Volume53, Issue2

May / Mai 2020

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Do economic integration agreements affect trade predictability? A group effect analysis

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Do economic integration agreements affect trade predictability? A group effect analysis

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