Facchini, Giovanni
[VerfasserIn]
;
Silva, Peri
[Sonstige Person, Familie und Körperschaft];
Willmann, Gerald
[Sonstige Person, Familie und Körperschaft]
The Political Economy of Preferential Trade Agreements
Erschienen in:Bielefeld Working Papers in Economics and Management ; No. 9-2017
Umfang:
1 Online-Ressource (53 p)
Sprache:
Englisch
DOI:
10.2139/ssrn.3090928
Identifikator:
Entstehung:
Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments December 01, 2017 erstellt
Beschreibung:
In this paper, we develop a political economy model to study the decision of representative democracies to join a preferential trading agreement (PTA), distinguishing between free trade areas (FTA) and customs unions (CU). Our theoretical analysis suggests that income inequality and bilateral trade imbalances are important factors in determining the formation of PTAs, while differences in production structure among prospective member countries determine whether a CU or an FTA will emerge in equilibrium. Using a sample of 136 countries over the period 1960-2005, our empirical analysis lends strong support to these predictions: Income inequality and trade imbalances both reduce the likelihood of PTA formation, while geographical specialization increases the conditional probability of an FTA (over a CU)