The Political Economy of Preferential Trade Agreements: An Empirical Investigation

The Political Economy of Free Trade Agreements: An Empirical Investigation

This paper studies how income inequality affects the probability of signing free trade agreements (FTAs) in a political economy framework. The median voter approach to FTA formation within a Heckscher-Ohlin framework predicts that an increase in inequality lowers the desirability of an FTA if the partner country is relatively labor abundant, ceteris paribus, and raises the desirability of such ...

Preferential Trade Agreements

Trade Agreements and Endogenously Incomplete Contracts: A Political Economy Approach

We develop a political economy model of trade agreements that incorporates contracting costs and uncertainty. The model delivers simple expressions for policy bindings with parameters relating to trade shocks and to political demand shocks. We identified conditions under which the trade volume is positively associated with the payoff of restricting production subsidy/consumption tax. Our model ...

Political Ideology and Endogenous Trade Policy: An Empirical Investigation¤

In this paper, we empirically investigate how the ideology of the government in power a®ects trade policy. The prediction of a partisan, ideology-based model (within a two-sector, two-factor Heckscher-Ohlin framework) is that left-wing governments will adopt more protectionist trade policies in capital rich countries, but adopt more pro-trade policies in labor rich economies than right-wing one...

The Trade Effects of Endogenous Preferential Trade Agreements

Recent work by Anderson and van Wincoop (2003) establishes an empirical modeling strategy which takes full account of the structural, non-(log-)linear impact of trade barriers on trade in new trade theory models. Structural new trade theory models have never been used to evaluate and quantify the role of endogenous preferential trade agreement (PTA) membership for trade in a way which is consis...