Publication Type
Working Paper
Version
publishedVersion
Publication Date
9-2007
Abstract
Rose (2004) showed that the WTO or its predecessor, the GATT, did not promote trade, based on conventional econometric analysis of gravity-type equations of trade. We argue that conclusions regarding the GATT/WTO trade effect based on gravity-type equations are arbitrary and subject to parametric misspecifications. We propose using nonparametric matching methods to estimate the 'treatment effect' of GATT/WTO membership, and permutation-based inferential procedures for assessing statistical significance of the estimated effects. A sensitivity analysis following Rosenbaum (2002) is then used to evaluate the sensitivity of our estimation results to potential selection biases. Contrary to Rose (2004), we find the effect of GATT/WTO membership economically and statistically significant, and far greater than that of the Generalized System of Preferences (GSP).
Keywords
GATT/WTO, GSP, treatment effect, matching, permutation test, signed-rank test, sensitivity analysis
Discipline
International Economics
Research Areas
International Economics
First Page
1
Last Page
40
Publisher
SMU Economics and Statistics Working Paper Series, No. 06-2007
City or Country
Singapore
Citation
CHANG, Pao Li and LEE, Myoung-Jae.
The WTO Trade Effect. (2007). 1-40.
Available at: https://ink.library.smu.edu.sg/soe_research/1075
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Comments
Published in Journal of International Economics, 2011, https://doi.org/10.1016/j.jinteco.2011.05.011