Working Paper: CEPR ID: DP1294
Authors: Tamim Bayoumi; Barry Eichengreen
Abstract: This paper considers the impact on trade of preferential arrangements in Europe since the 1950s. Using a first difference version of the gravity model, we find that the EEC and EFTA altered the pattern of international trade. We also find evidence of trade diversion in several cases, notably that of the EEC in the 1960s.
Keywords: gravity model; customs unions
JEL Codes: F13; F15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Formation of the EEC (F15) | Increased intra-bloc trade among EEC members (F15) |
| Formation of the EEC (F15) | Trade diversion from EEC to non-member countries (F14) |
| Formation of the EFTA (F15) | Trade creation (F19) |
| Accession of Spain and Portugal to the EEC (F55) | Net trade-creating effects (F19) |