This paper re-examines the GATT/WTO membership effect on bilateral trade flows, using nonparametric methods including pair-matching, permutation tests, and a Rosenbaum (2002) sensitivity analysis. Together, these methods provide an estimation framework that is robust to misspecification bias, allows general forms of heterogeneous membership effects, and addresses potential hidden selection bias. This is in contrast to most conventional parametric studies on this issue. Our results suggest large GATT/WTO trade-promoting effects that are robust to various restricted matching criteria, alternative GATT/WTO indicators, non-random incidence of positive trade flows, inclusion of multilateral resistance terms, and different matching methodologies.
Bibliographical noteFunding Information:
We thank two anonymous referees, Robert Staiger, Jeffrey Bergstrand, and Alan Deardorff for their helpful comments and suggestions. We also thank colleagues, Hian Teck Hoon, Davin Chor, and Tomoki Fujii, at SMU for their helpful feedback at different stages of the project. The research of Myoung-jae Lee was supported by the Korea Research Foundation funded by the Korean Government ( KRF-2009-327-B00091 ).
Copyright 2011 Elsevier B.V., All rights reserved.
- Permutation test
- Sensitivity analysis
- Signed-rank test
- Trade flow
- Treatment effect
ASJC Scopus subject areas
- Economics and Econometrics