Essays on Trade Policy

Author

Ward ReesmanFollow

Date of Award

5-2024

Document Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Economics

Committee Chair/Advisor

Scott L. Baier

Committee Member

Cheng Chen

Committee Member

Aspen Gorry

Committee Member

Matthew Lewis

Abstract

This dissertation consists of two essays on international trade and trade policy, focusing on a quantitative evaluation of the causes and consequences of trade barriers and economic integration. In the first essay, I examine the role of a widely-used discriminatory trade barrier in shaping dynamic trade patterns of exporters across a range of affected and unaffected export markets. In the next chapter, I explore the heterogeneous economic determinants impacting the formation of economic integration agreements among countries, paying specific attention to the role of bilateral migration flows.

The first chapter estimates the dynamic trade effects of temporary trade barriers (TTBs), a form of targeted trade barrier widely used by members of the World Trade Organization in response to alleged unfair trade practices. TTBs like antidumping (AD) have been shown to have large and persistent effects on trade flows between countries, but there is mixed evidence on the effect of these tariffs on trade to unrelated markets in part driven by unique institutional features that complicate identification. In this essay, we revisit these classic TTB questions with a focus on AD policy using publicly available product-level trade data and a dynamic difference-in-differences framework, paying specific attention to trends in export growth. We find qualitatively different trade effects when accounting for growth effects that suggest AD investigations are associated with global reductions in within-product trade. We provide evidence that these reductions are not primarily driven by policy-related chilling effects, and argue scale economies in exporting may play a large part. We also identify a significant amount of heterogeneity in the third market trade effects of AD investigation across export markets. Our findings suggest the aggregate impact of AD policy on global trade flows of exporters is potentially large and complicated due to interdependence of export markets and long run dynamics.

The second essay investigates the formation of economic integration agreements (EIAs). EIAs are widespread multilateral agreements between countries with a variety of characteristics based on the level of integration, ranging from preferential trade agreements to economic unions. However, little research documents heterogeneity in the economic determinants of EIA formation beyond the classical forces of trade creation and diversion. Further, little previous work has explored the role of migration flows in shaping international integration. In this paper, we investigate the economic determinants of EIA formation using a panel of trade, migration, gravity, and EIA data over the period 1990-2015. We first build a simple spatial model of trade and migration that delivers a structural gravity equation for the movement of people across borders, which we estimate by using changes in EIA membership as changes in migration costs. We find novel evidence on the relationship between EIA participation and migration that suggests deeper agreements generate more migration flows, and these flows exhibit a non-linear relationship with respect to bilateral distance. The model also suggests a set of economic variables that impact the welfare gains from certain types of EIAs, and thus form potential determinants to agreement formation. To this end, we build and estimate a random forest to verify the most important factors that influence the formation of certain levels of EIAs. The random forest suggests the importance of certain country or country-pair economic characteristics in determining EIA membership is heterogeneous across agreement types, and a prediction exercise using distance, contiguity, and country-pair income and income differentials can predict out-of-sample EIA formation with a high degree of accuracy.

Recommended Citation

Reesman, Ward, "Essays on Trade Policy" (2024). All Dissertations. 3573.
https://open.clemson.edu/all_dissertations/3573