Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/208280
Authors: 
Eichengreen, Barry
Mehl, Arnaud
Chițu, Livia
Year of Publication: 
2019
Series/Report no.: 
ECB Working Paper 2246
Abstract: 
We analyze the role of economic and security considerations in bilateral trade agreements. We use the pre-World War I period to test whether trade agreements are governed by pecuniary factors, such as distance and other frictions measured by gravity covariates, or by geopolitical factors. While there is support for both hypotheses, we find that defense pacts boost the probability of trade agreements by as much as 20 percentage points. Our estimates imply that were the U.S. to alienate its geopolitical allies, the likelihood and benefits of successful bilateral agreements would fall significantly. Trade creation from an agreement between the U.S. and E.U. countries would decline by about 0.6 percent of total U.S. exports.
Subjects: 
international trade agreements
alliances
geopolitics
JEL: 
F13
N20
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-3508-1
Document Type: 
Working Paper

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