Observing the Effects of CAFTA on Trade Using the Gravity Model of Trade
| Thesis title in Czech: | Observing the Effects of CAFTA on Trade Using the Gravity Model of Trade |
|---|---|
| Thesis title in English: | Observing the Effects of CAFTA on Trade Using the Gravity Model of Trade |
| Key words: | Gravity model, CAFTA, FTAs, US trade, Central America |
| English key words: | Gravity model, CAFTA, FTAs, US trade, Central America |
| Academic year of topic announcement: | 2015/2016 |
| Thesis type: | diploma thesis |
| Thesis language: | angličtina |
| Department: | Institute of Economic Studies (23-IES) |
| Supervisor: | Mgr. Michal Paulus, Ph.D. |
| Author: | hidden - assigned by the advisor |
| Date of registration: | 09.06.2016 |
| Date of assignment: | 09.06.2016 |
| Date and time of defence: | 08.02.2018 08:15 |
| Venue of defence: | Jinonice - U Kříže 8, J3093, Jinonice - místn. č. 3093 |
| Date of electronic submission: | 30.12.2017 |
| Date of proceeded defence: | 08.02.2018 |
| Opponents: | Ing. Vilém Semerák, M.A., Ph.D. |
| URKUND check: | |
| Guidelines |
| According to the FSV guidelines for master theses. |
| References |
| Bacchetta, M., Beverelli, C., Cadot, O., Fugazza , M., Grether, J.-M., Helble, M., . . . Piermartini, R. (2012). A Practical Guide to Trade Policy Analysis. World Trade Organization, 1-236.
Baier, S., & Bergstrand, J. (2007). Do free trade agreements actually increase members' international trade? Journal of International Economics, 71, 72-95. Baldwin, R., & Taglioni, D. (2006). Gravity for Dummies and Dummies for the Gravity Equation. National Bureau of Economic Research. Beteta, H., & Moreno-Brid, J. (2014). Structural change and growth in Central America and the Dominican Republic: An overview of two decades, 1990-2011. Santiago, Chile: Economic Commission for Latin America and the Caribbean. Jaramillo, C., Lederman, D., Bussolo, M., Gould, D., & Mason, A. (2006). Challenges of CAFTA: Maximizing the Benefits for Central America. Washington D.C., USA: The International Bank for Reconstruction and Development / The World Bank. Magee, C. (2008). New measures of trade creation and trade diversion. Journal of International Economics, 349-362. Park, H. (2010). Practical Guides To Panel Data Analysis. 1-3. Santos Silva, J., & Tenreyro, S. (2006). The Log of Gravity. The Review of Economics and Statistics, 88(4), 641-658. Shepherd, B. (2013). The Gravity Model of Interational Trade: A User Guide. United Nations Publication. Vicard, V. (2011). Determinants of successful regional trade agreements. Economics Letters, 111, 188-190. Yang, S., & Martinez-Zarzoso, I. (2014). A panel data analysis of trade creation and trade diversion effects: The case of ASEAN–China Free Trade Area. China Economic Review, 29, 138-151. Yeboah, O.-A., Shaik , S., Allen, A., & Ofori-Boadu, V. (2007). Trade Effects of the Central American Free Trade Agreement. American Agricultural Economics Association Annual Meeting, 1-19. |
| Preliminary scope of work |
| Topic Characteristics / Research Question(s):
My thesis will focus on analyzing trade between US and countries in Central America. The main purpose is to define the effects of the Central America Free Trade Agreement (CAFTA) on trade in this area. I will use the gravity model of trade to assess the impact of this free trade agreement on trade levels in the region. In times of foreign trade policy uncertainty due to US president Donald Trump and trade competition from China, it is relevant to analyze trade agreements and their usefulness for the US. Working hypotheses: 1. Hypothesis #1: CAFTA has a significant and positive impact trade 2. Hypothesis #2: Membership in CAFTA increases exports of the US to the Central America region. 3. Hypothesis #3: Membership in CAFTA increases exports of the Central America region the US. Methodology: I will use the gravity model of trade to analyze the effect of a trade agreement on trade levels. Specifically, I will interpret the sensitivity of exports from US to Central America to the FTA dummy, and vice versa. I plan on using panel data in the period from 1995-2015. The variables I will be using are standard for this kind of analysis. My dependent variable will be exports. The independent variables will be GDPs of exporter and partner, distance, FTA dummy, various country-specific variables (such as common language, common land border, etc.) I will specify the model using the dummy method proposed by Baldwin and Taglioni (2006) and consequently, will estimate the model using PPML and OLS techniques in order to be able to compare the results from both. I will account for the endogeneity of the FTA variable using the Baier & Bergstrand (2007) method. Outline: 1. Introduction 2. CAFTA and its Members 3. Literature Review 4. Data and Methodology 5. Empirical Results 6. Discussion 7. Conclusion |
| Preliminary scope of work in English |
| Topic Characteristics / Research Question(s):
My thesis will focus on analyzing trade between US and countries in Central America. The main purpose is to define the effects of the Central America Free Trade Agreement (CAFTA) on trade in this area. I will use the gravity model of trade to assess the impact of this free trade agreement on trade levels in the region. In times of foreign trade policy uncertainty due to US president Donald Trump and trade competition from China, it is relevant to analyze trade agreements and their usefulness for the US. Working hypotheses: 1. Hypothesis #1: CAFTA has a significant and positive impact trade 2. Hypothesis #2: Membership in CAFTA increases exports of the US to the Central America region. 3. Hypothesis #3: Membership in CAFTA increases exports of the Central America region the US. Methodology: I will use the gravity model of trade to analyze the effect of a trade agreement on trade levels. Specifically, I will interpret the sensitivity of exports from US to Central America to the FTA dummy, and vice versa. I plan on using panel data in the period from 1995-2015. The variables I will be using are standard for this kind of analysis. My dependent variable will be exports. The independent variables will be GDPs of exporter and partner, distance, FTA dummy, various country-specific variables (such as common language, common land border, etc.) I will specify the model using the dummy method proposed by Baldwin and Taglioni (2006) and consequently, will estimate the model using PPML and OLS techniques in order to be able to compare the results from both. I will account for the endogeneity of the FTA variable using the Baier & Bergstrand (2007) method. Outline: 1. Introduction 2. CAFTA and its Members 3. Literature Review 4. Data and Methodology 5. Empirical Results 6. Discussion 7. Conclusion |