DP1294 Is Regionalism Simply a Diversion? Evidence from the Evolution of the EC and EFTA

Author(s): Tamim Bayoumi, Barry Eichengreen
Publication Date: November 1995
Keyword(s): Customs Unions, Gravity Model
JEL(s): F13, F15
Programme Areas: International Macroeconomics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=1294

This paper considers the impact on trade of preferential arrangements in Europe since the 1950s. Using a first difference version of the gravity model, we find that the EEC and EFTA altered the pattern of international trade. We also find evidence of trade diversion in several cases, notably that of the EEC in the 1960s.