Abstract
I examine the hypothesis that membership in the World Trade Organization (WTO) and its predecessor the General Agreement on Tariffs and Trade (GATT) has increased the stability and predictability of trade flows. I use a large data set covering annual bilateral trade flows between over 175 countries between 1950 and 1999, and estimate the effect of GATT/WTO membership on the coefficient of variation in trade computed over 25-year samples, controlling for a number of factors. I also use a comparable multilateral data set. There is little evidence that membership in the GATT/WTO has a significant dampening effect on trade volatility.
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References
Anderson, James and Eric van Wincoop (2003) “Gravity with Gravitas: A Solution to the Border Puzzle.” American Economic Review 170–192.
Rose, Andrew K. (2004) “Do We Really Know that the WTO Increases Trade?” American Economic Review 98–114.
Subramanian, Arvind and Shang-Jin Wei (2003) “The WTO Promotes Trade, Strongly but Unevenly,” NBER working paper #10,024.
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JEL Classification Number: F13
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Rose, A.K. Does the WTO Make Trade More Stable?. Open Econ Rev 16, 7–22 (2005). https://doi.org/10.1007/s11079-005-5329-9
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DOI: https://doi.org/10.1007/s11079-005-5329-9