Mercosur: Trade Creation or Trade Diversion? An application of the Gravity Model and Kalman filter

Trade, Integration and Economic Development. The EU and Latin America

SpringerWienNewYork

Lugar: Vienna; Año: 2008; p. 221 - 248

This paper aims to develop an econometric model which permits to assess the impact of MERCOSUR on Argentina's international trade in manufactured products by specifying and estimating a gravity equation. First, we identify the starting year of the impact of the integration precess and determine the variables that best explain bilateral trade flows. After determining that the structures of the monde and the antimonde are statiscally different, we compute the impact of MERCOSUR. Our results show that MERCOSUR affected bilateral trade flows of manufactured products particularly since 1994. Trade creation, internal and external, in imports and exports is the main effects.