FTA effects on agricultural trade with matching approaches

GaSeul Lee, Song Soo Lim

Research output: Contribution to journalArticle

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 the 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. Analysis of the difference between selection bias controlled through matching and uncontrolled selection bias shows that 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 previous studies on FTA trade effects have overestimated the effect, because selection bias was not fully addressed.

Original languageEnglish
JournalEconomics
Volume9
DOIs
Publication statusPublished - 2015 Dec 1

Fingerprint

Selection bias
Free trade agreements
Agricultural trade
Average treatment effect
Agricultural products
Economic effect
Empirical methods
Treatment effects
Propensity score matching
Robustness
Research issues
Trade liberalization

Keywords

  • Agricultural trade
  • Free trade agreement
  • Propensity score matching
  • Selection bias

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

Cite this

FTA effects on agricultural trade with matching approaches. / Lee, GaSeul; Lim, Song Soo.

In: Economics, Vol. 9, 01.12.2015.

Research output: Contribution to journalArticle

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