Replication material for "The Economic Impact of Deepening Trade Agreements"

Replication material for "The Economic Impact of Deepening Trade Agreements", previously circulated as (" The Economic Impact of Deepening Trade Agreements") by Lionel Fontagné, Nadia Rocha, Michele Ruta and Gianluca Santoni.

This paper explores the economic impacts of preferential trade agreements, conditional on their level of ambition. The quantification analysis relies on a comprehensive characterization of the provisions included in PTAs based on a new database compiled by the World Bank. We use information on all policy domains (excluding tariffs) covering objectives, substantive commitments, regulatory requirements and enforcement procedures included in legal texts and annexes of the 278 PTAs in force and notified to the WTO up to 2018. We cluster these 278 agreements, encompassing 910 provisions over 18 policy areas and estimate the trade elasticity for the different clusters. Importantly, we take the gravity equation seriously and integrate internal trade flows in the estimation of the trade impacts of the different types of PTAs. We compile the largest database for which internal and international trade is available in a panel, based on the last release of UNIDO data. We then use these elasticities in a series of general equilibrium counterfactual situations for endowment economies. We rely on a general equilibrium gravity model for and endowment economy and change the ambition of existing agreements between country pairs. It reveals that deepening existing agreements (the intensive margin of regional integration) could boost world trade by 3.9 percent and world GDP by 0.9 percent.

The main replication folder includes the file "Cluster_list_oct_2021" reporting the list of agreements and the associated cluster. The replication folder is organised in different subfolders: data, progs, figures.