Kolmapäev, 4. november 2020 kell 11.00 Join MS Teams
Maria Ptashkina (Pompeu Fabra University)
Measuring Heterogeneity Across Preferential Trade Agreements
Most studies of preferential trade agreements (PTAs) use gravity models with PTAs as binary variables. This approach leaves out substantial amount of metadata and semantic information embodied within the texts. Over the last several decades, PTAs among countries have increased both in number and in depth. There is considerable variation in the content and structure of trade texts. I construct a novel dataset with individual characteristics of PTAs and a document-term matrix. Using text-mining techniques and predetermined intended word meanings, I identify words that correspond to “high” and “low” levels of legal enforceability within an agreement. This index is then used in structural gravity estimation to capture the associated variation in the value of trade flows. The results indicate that accounting for heterogeneity across PTAs is important to correct for the measurement error in previous studies.