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International Economics and Economic Policy

, Volume 15, Issue 2, pp 501–522 | Cite as

MERCOSUR in gravity: an accounting approach to analyzing its trade effects

  • Frederik Stender
Original Paper
  • 164 Downloads

Abstract

This paper aims at unveiling the roots of integration-induced trade effects for MERCOSUR. For this purpose, its methodology combines previous dummy-variables- and continuous variable approaches to identifying trade creation and trade diversion effects in a gravity model framework. Applying a straightforward accounting exercise to the integration-induced trade effects which are found for MERCOSUR en bloc, two results are central: Firstly, with sectoral exceptions, I generally identify pure trade creating effects on the import side but also find trade diversion with associate countries when refining extra-bloc country status. Secondly, while extra-bloc import growth seems to be driven predominantly by non-tariff determinants, trade creation in pooled commodity imports for the largest fraction stems from differences in the tariff treatment between trading partners.

Keywords

Gravity model of trade Regional economic integration Trade creation and trade diversion Tariff margin Panel data 

JEL classification

F13 F14 F15 

Notes

Acknowledgements

I am indebted to Joscha Beckmann and Ansgar Belke for valuable comments and suggestions.

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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2017

Authors and Affiliations

  1. 1.Ruhr-University BochumBochumGermany

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