Empirical essays in international trade

This dissertation consists of three essays which focus on empirical issues involving international trade policy. In particular, gravity models are estimated to examine the trade-promoting effects of membership into trade agreements, the World Trade Organization (WTO), and currency unions.;Now, quantifying trade promoting effects of such policy regimes is challenging given non-random selection and the paucity of instruments. Accordingly, the first essay employs novel (in the trade literature) methods, proposed by Altonji et al. (2005), to analyze the extent to which any positive association between bilateral trade and membership into regional trade agreements (RTAs) and currency unions (CUs) can be considered causal. Despite not identifying point estimates, striking results are obtained. Although most cross-sections find both RTAs and CUs to be associated with increased bilateral trade, the evidence in favor of a causal effect is strong only for CUs. At the extensive margin, recent years find strong evidence supportive of both policies causing trade.;The second essay provides the first empirical analysis directly comparing the effects of customs unions and free trade agreements (FTAs) on members' bilateral trade, while addressing the biases arising from crucial time-invariant unobservables and log-linearization of the gravity model. While Baier and Bergstrand (2007) address the former and find an FTA to approximately double members' bilateral trade, after addressing both biases, a customs union is found to be responsible for this. More generally, members of a customs union are found to engage in significantly greater volumes of bilateral trade than FTA members.;Next, ever since Rose (2004) found little evidence of the WTO's role in enhancing members' bilateral trade, a number of studies have employed the gravity model in an attempt to solve what has come to be viewed as an interesting mystery. The third essay examines this mystery and improves upon previous attempts to solve it. In fact, it provides the first study to simultaneously address three issues which can potentially bias coefficient estimates. First, it includes zero trade observations to avoid a potential sample selection bias. Second, it includes proper controls for the theoretically motivated multilateral resistance terms. Finally, it considers a relatively recent de facto definition of WTO membership. The resulting estimates find little evidence of the WTO's trade-promoting role.