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Unveiling the trade and welfare effects of regional services trade agreements: A structural gravity approach

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  • Lin, Qi
  • Lin, Xi

Abstract

Liberalization of services trade has become a critical economic agenda in the world. Although previous studies have examined the impact of regional services trade agreements (services RTAs) on services trade, little attention is paid to assessing the estimation consistency with structural gravity theory and analyzing the general equilibrium effects of services RTAs. Using data from 43 economies plus a “rest-of-the-world” over the period 2000–2014, we propose a theoretically consistent adjustment for structural gravity estimations and re-evaluate the services RTAs impact on services trade. Proper controlling for intra-national services trade flows leads to a large, positive, and statistically significant services RTAs effect. Furthermore, the general equilibrium comparative static analysis reveals that services RTAs have different effects on services exports and economic welfare among all economics. Finally, we counterfactually estimate the general equilibrium trade and welfare effects of the three mega-services RTAs and provide several important policy implications.

Suggested Citation

  • Lin, Qi & Lin, Xi, 2023. "Unveiling the trade and welfare effects of regional services trade agreements: A structural gravity approach," Economic Modelling, Elsevier, vol. 127(C).
    • Handle: RePEc:eee:ecmode:v:127:y:2023:i:c:s0264999323002389
    DOI: 10.1016/j.econmod.2023.106426
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    1. Yang, Yichen & Liu, Wen, 2024. "Free trade agreements and domestic value added in exports: An analysis from the network perspective," Economic Modelling, Elsevier, vol. 132(C).

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    More about this item

    Keywords

    Services RTAs; Trade in services; Trade and welfare effects;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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