Are there any asymmetries in the bilateral free trade agreements? An alternative approach for estimating dynamic effects.

Abstract

The main purpose of this work is to estimate the dynamic impact of bilateral free trade agreements (FTA) on economic relations between countries. We present an alternative methodology for assessing the ex post effects of trade agreements in international exports flows. The study focuses on transfer functions that can capture the dynamic impact of FTA on trade flows over time. We apply transfer functions methodology to bilateral trade series after having estimated common factors to all trade series to capture global economic cycles. A characterisation of American FTAs is obtained based on the dynamic profits of each signatory country.