Date of Award

8-2014

Document Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Legacy Department

Economics

Advisor

Dr. Scott L. Baier

Committee Member

Dr. Michal M. Jerzmanowski

Committee Member

Dr. Curtis J. Simon

Committee Member

Dr. Robert F. Tamura

Abstract

This Dissertation consists of three chapters. These chapters use the power of the gravity model widely employed in the international economics literature. The first chapter investigates how economic integration agreements impact countries' local technology, wages, prices and market access, and how to aggregate these effects to compute the changes in countries' welfare. By examining 16 countries that have harmonized with the European Union since 1980, we show that almost all of the participating countries experience welfare gains as a result of signing integration agreements with the European Union. The objective of the second chapter is to explain the determinants of foreign direct investment (FDI) flows; in particular, we focus on the effects of estimates of economic integration agreements on FDI flows while controlling for time-varying country specific unobserved variables as well as time constant country-pair unobserved variables. As compared to the previous literature, we find that the coefficient estimates of common market and custom union are overestimated and the free trade agreement coefficient becomes insignificant after accounting for above-mentioned unobserved variables. Building on the work of Baier and Bergstrand (2009), the third chapter aims to obtain unbiased, consistent and efficient coefficient estimates of trade cost variables by accounting for unobserved country heterogeneity and approximation errors.

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Economics Commons

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