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The WTO Trade Effect

Author

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  • Pao-Li Chang

    (School of Economics, Singapore Management University)

  • Myoung-Jae Lee

    (Department of Economics, Korea University)

Abstract

This paper reexamines the GATT/WTO membership effect on bilateral trade flows, using nonparametric methods including pair-matching, permutation tests, and a Rosenbaum (2002) sensitivity analysis. Together, these methods provide an estimation framework that is robust to misspecification biases, allows general forms of heterogeneous treatment effects, and addresses potential hidden selection biases. This is in contrast to most conventional parametric studies on this issue. Our results suggest large GATT/WTO trade-promoting e®ects, robust to various restricted matching criteria, alternative indicators for GATT/WTO involvement, different matching methodologies, non-random incidence of positive trade flows, and inclusion of multilateral resistance terms.

Suggested Citation

  • Pao-Li Chang & Myoung-Jae Lee, 2010. "The WTO Trade Effect," Working Papers 31-2010, Singapore Management University, School of Economics.
    • Handle: RePEc:siu:wpaper:31-2010
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    as
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    More about this item

    Keywords

    Trade flow; Treatment effect; Matching; Permutation test; Signed-rank test; Sensitivity analysis;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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