Discussion Paper

No. 2015-25 | April 09, 2015
FTA Effects on Agricultural Trade with Matching Approaches

Abstract

While the trade effect of free trade agreements (FTAs) is a global issue, little research has examined the economic effects of trade liberalization on agricultural products with robust empirical methods. In this study, propensity score matching for controlling selection bias is used to examine and analyze the effect of FTAs on the trade of South Korea’s agricultural products. To enhance the robustness of estimated results, differences between the FTA treatment effects in 2010 and 2012 are analyzed. The results reveal that the effect of FTAs on agricultural trade varies slightly, depending on the matching approach used; however, the signs of all estimated average treatment effects on the treated (ATT) values are positive, and more values are positive in 2012 than in 2010. Analysis of the difference between selection bias controlled through matching and uncontrolled selection bias shows the value of the average treatment effect (ATE) with uncontrolled bias is greater than the ATT estimate calculated through matching. This implies that controlled versus uncontrolled selection bias can result in different ATE and ATT estimates, and that prior studies on FTA trade effects have overestimated the effect, as selection bias was not addressed therein.

Data Set

JEL Classification:

C54, F15, Q17

Assessment

  • Downloads: 2960

Links

Cite As

GaSeul Lee and Song Soo Lim (2015). FTA Effects on Agricultural Trade with Matching Approaches. Economics Discussion Papers, No 2015-25, Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2015-25


Comments and Questions


Anonymous - Referee Report 1
April 27, 2015 - 08:28

see attached file


Song Soo Lim - Reply to Referee Report 1
October 07, 2015 - 08:12

see attached file


Anonymous - Referee Report 2
May 27, 2015 - 08:48

see attached file


Song Soo Lim - Reply to Referee Report 2
October 08, 2015 - 08:38

see attached file