Alejandra Martínez-Martínez, Silviano Esteve-Pérez, Salvador Gil-Pareja, Rafael Llorca-Vivero
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Abstract
This study applies multilevel modelling to the analysis of trade flows. This methodology can complement the use of the standard gravity equation in addressing the influence of geographical distance on the impact of trade agreements on bilateral trade (the natural-partner hypothesis). The analysis suggests that the simplest, most obvious, and best way to nest country pairs with international trade data is by distance. To this end, a sample of 69 countries with data on domestic flows over the period 1986–2016 was used. This sample accounts for around 85% of world trade data. The estimations suggest that the pro-trade effects of preferential trade agreements decrease with distance to trade partners, while this does not occur with the multilateral trading system. What is more interesting is that the former result only holds for the preferential trade agreements involving goods, which supports the natural-trading partner hypothesis, but not for those that include services. In the latter case, the impact increases with distance. This suggests that deeper preferential trade agreements reduce the cost of distance as a barrier to trade, which probably reflects cultural (regulation) distance.
期刊介绍：
International Advances in Economic Research (IAER) was established to promote the dissemination of economic and financial research within the international community. Founded in 1995 by the International Atlantic Economic Society, a need was identified to provide the latest research on today''s economic policies and tomorrow''s economic and financial conditions. Economists can no longer be concerned with professional developments only in their home country. Research by scholars in one country can easily have implications for other countries, yet often vital results are not shared. Economic restructuring in a shrinking world demands close analysis and careful interpretation. In IAER, authors from around the globe look at these issues, coming together in the cross-fertilization of multinational ideas. The journal provides economists, financial specialists, and scholars in related disciplines with much-needed opportunities to share their insights with worldwide colleagues. Policy-oriented, empirical, and theoretical research papers in all economic and financial areas are welcome, without regard to methodological preferences or school of thought. All manuscripts are submitted to a double-blind, peer review process.
In addition to formal publication of full-length articles, IAER provides an opportunity for less formal communication through its Research Notes section. A small point may not be worthy of a full-length, formal paper but is important enough to warrant dissemination to other researchers. Research in progress may be of interest to other scholars in the field. A research approach ending in negative results needs to be shared to save others similar pitfalls. Research Notes has been established to facilitate this form of communication. The section provides a means by which short manuscripts of less than 200 words can quickly appear in IAER. The review process for these shorter manu scripts is usually completed within 30 days.
Officially cited as: Int Adv Econ Res
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