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Have Free Trade Agreements Created Trade? Evidence from CEPA

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  • Yonghong Zhou

Abstract

This paper revisits the issue of trade creation effects in multi‐stage free trade agreements (FTA). In contrast to the empirical studies that use the gravity equation to study trade creation effects, we apply a triple difference in differences approach to resolve their shortcomings, including factors being omitted and endogeneity. After the identification of treatment and control groups at the eight‐digit Harmonized System (HS) code product level, the regression analysis results show that there are no significant trade creation effects with the FTA, suggesting that the role of FTA may be a signalling beyond trade.

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  • Yonghong Zhou, 2019. "Have Free Trade Agreements Created Trade? Evidence from CEPA," Pacific Economic Review, Wiley Blackwell, vol. 24(4), pages 550-569, October.
    • Handle: RePEc:bla:pacecr:v:24:y:2019:i:4:p:550-569
    DOI: 10.1111/1468-0106.12198
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    Cited by:

    1. Zhou, Yonghong & Zheng, Xian & Yuan, Ziqing, 2022. "Trade liberalization and wages: Evidence from the closer economic partnership arrangement between mainland China and Hong Kong," Research in International Business and Finance, Elsevier, vol. 61(C).
    2. Jin Suk Park & Eunju Hwang, 2023. "Sectoral FTA gains, conflicts, and the role of interindustry factor mobility: Evidence from Korea's free trade agreement," Pacific Economic Review, Wiley Blackwell, vol. 28(1), pages 97-123, February.

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