Discussion paper

DP7904 Are Free Trade Agreements Contagious?

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.


Baldwin, R and D Jaimovich (2010), ‘DP7904 Are Free Trade Agreements Contagious?‘, CEPR Discussion Paper No. 7904. CEPR Press, Paris & London. https://cepr.org/publications/dp7904