Common markets and trade liberalization
In: The Canadian journal of economics: the journal of the Canadian Economics Association = Revue canadienne d'économique, Band 37, Heft 2, S. 484-508
ISSN: 1540-5982
Abstract. The GATT Rounds show that trade liberalization is essentially a cooperative non‐stationary dynamic process. Therefore, the impact of Regionalism on trade liberalization possibly changes over time. I adapt the trade liberalization model of Devereux (1997) to examine how this impact varies. Common markets lead to a one‐time shock in immediate tariffs, as well as to a change in their rate of decline. I find that common markets that happen late in the trade liberalization process are more likely to lead to a decline in immediate tariffs. Common markets also increase the rate of decline of tariffs after their formation. JEL Classification: F03, F15