Discussion Paper Details

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Title: Are Free Trade Agreements Contagious?

Author(s): Richard Baldwin and Dany Jaimovich

Publication Date: June 2010

Keyword(s): Contagion Effec, Free Trade Agreements and International Trade

Programme Area(s): International Trade and Regional Economics

Abstract: This paper presents a new model of the domino effect which is used to generate an empirical index of how "contagious" FTAs are with respect to third nations due to the trade diversion. We test our contagion hypothesis together with alternative specifications of interdependence and other political, economical and geographical determinants of FTA formation. Our main finding is that contagion is present in our data and is robust to various econometric specifications and samples.

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Bibliographic Reference

Baldwin, R and Jaimovich, D. 2010. 'Are Free Trade Agreements Contagious?'. London, Centre for Economic Policy Research.