TY  - JOUR
AU  - Romalis,John
TI  - NAFTA's and CUSFTA's Impact on International Trade
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11059
PY  - 2005
Y2  - January 2005
UR  - http://www.nber.org/papers/w11059
L1  - http://www.nber.org/papers/w11059.pdf
N1  - Author contact info:
John Romalis
Booth School of Business
University of Chicago
5807 South Woodlawn Avenue, Ste. 421
Chicago, IL 60637
Tel: 773/834-9173
E-Mail: jromalis@ChicagoBooth.edu
AB  - This paper identifies the effects of preferential trade agreements on trade volumes and prices using detailed trade and tariff data. It identifies demand elasticities by developing a difference in differences based method that exploits the fact that the additional wedge driven between consumption patterns in a liberalizing versus a non-liberalizing country is directly related to the tariff reduction. Supply elasticities are identified by using tariffs as instruments for observed quantities. Analysis of world-wide trade data for 5,000 commodities shows that NAFTA and CUSFTA have had a substantial impact on international trade volumes, but a modest effect on prices and welfare. NAFTA and CUSFTA increased North American output and prices in many highly-protected sectors by driving out imports from non-member countries.
ER  -