Economics, Econometrics and Finance
4 years ago

New research reveals surprising impacts of free trade agreements on economies

Journal of International Economics
On the widely differing effects of free trade agreements: Lessons from twenty years of trade integration
Scott L. Baier, Yoto V. Yotov, Thomas Zylkin

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The article explores the effects of free trade agreements (FTAs) over the past 20 years. By analyzing data from 1986-2006, the researchers found that most variations in FTA effects occur within agreements, rather than across different FTAs. They also discovered that FTA effects are weaker for distant trading pairs and pairs with high trade frictions. Additionally, the study shows that new FTAs have weaker effects on pairs with existing agreements. The researchers were able to predict the effects of future FTAs between any pair of countries based on these findings.