Trade Impact of European Union Preferential Policies: A Meta-Analysis of the Literature

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Abstract

The gravity model is used frequently to estimate the impact of European Union (EU) Preferential Trade Agreements (PTA) on trade flows. Because of differences in the datasets, sample sizes and independent variables employed, existing studies report very different estimates. This chapter reviews and analyses a large number of results using Meta-Analysis (MA) to provide pooled estimates of the effect of PTA on bilateral trade, based on fixed and random effects models. We test the estimation results for sensitivity to alternative specifications and different control variables. After filtering out potential biases, the MA confirms our expectations of a robust and positive effect of PTA.