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A Bayesian spatial probit estimation of Free Trade Agreement contagion

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Abstract

This paper analyzes the spatial interdependence of Free Trade Agreements (FTAs) in a cross-section framework using the Conta-gion Index proposed by Baldwin and Jaimovich (2010). A Bayesian heteroskedastic probit model is estimated, where a spatial lag is built based on the Contagion Index, finding evidence of interdependence related with a domino-like effect. I compare the results with simple probit estimations and other spatial specifications.

Suggested Citation

  • Dany Jaimovich, 2010. "A Bayesian spatial probit estimation of Free Trade Agreement contagion," IHEID Working Papers 07-2010, Economics Section, The Graduate Institute of International Studies.
    • Handle: RePEc:gii:giihei:heidwp07-2010
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    1. Kelejian, Harry H & Prucha, Ingmar R, 1999. "A Generalized Moments Estimator for the Autoregressive Parameter in a Spatial Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(2), pages 509-533, May.
    2. Baier, Scott L. & Bergstrand, Jeffrey H., 2009. "Bonus vetus OLS: A simple method for approximating international trade-cost effects using the gravity equation," Journal of International Economics, Elsevier, vol. 77(1), pages 77-85, February.
    3. Egger, Peter & Larch, Mario, 2008. "Interdependent preferential trade agreement memberships: An empirical analysis," Journal of International Economics, Elsevier, vol. 76(2), pages 384-399, December.
    4. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
    5. Baier, Scott L. & Bergstrand, Jeffrey H., 2004. "Economic determinants of free trade agreements," Journal of International Economics, Elsevier, vol. 64(1), pages 29-63, October.
    6. repec:asg:wpaper:1013 is not listed on IDEAS
    7. Neumayer, Eric & Plümper, Thomas, 2010. "Spatial Effects in Dyadic Data," International Organization, Cambridge University Press, vol. 64(1), pages 145-166, January.
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    Cited by:

    1. Baldwin, Richard & Jaimovich, Dany, 2012. "Are Free Trade Agreements contagious?," Journal of International Economics, Elsevier, vol. 88(1), pages 1-16.
    2. Yener Kandogan & Jens Hiller, 2018. "Alliances in international governmental organizations, regional trade agreement formation, and multinational enterprise regionalization strategy," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 49(6), pages 729-742, August.

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    More about this item

    Keywords

    Contagion Index; Free Trade Agreements; Spatial probit;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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