Abstract
The few existing empirical studies of US–Japan trade agreements have relied primarily on descriptive statistics or univariate time series methods. We conduct a potentially more powerful test by evaluating agreements in the context of well-specified econometric models. Consistent with trade theory, import demand is modeled as a cointegrating relationship with income and relative price variables, where a trade agreement may cause a structural break in the cointegrating vector. Results are mixed, with evidence in several sectors of a possible change in import behavior following market-opening trade agreements, while in other cases no significant impact can be detected.
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