Abstract
AbstractThe gravity model is used extensively to investigate the trade flow effects of Regional Trade Agreements (RTAs). A notable feature common to previous research is the use of aggregate trade data. These studies typically report conflicting, and even negative results of the effect of RTAs on members' trade. Using recent developments in the gravity equation suggested by Baier and Bergstrand (2007) and Anderson and van Wincoop (2003), this article demonstrates that RTA effects on members' trade depend fundamentally on whether the analysis focuses on agricultural or nonagricultural sectors, on the particular agreement analyzed, and on the length of the phase‐in period that characterizes almost all RTAs.
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