Open Conference Systems, ICQQMEAS2015

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Cyclicality and detection of trade convergence between Free Trade Agreement member countries
Anna Zarkada, Dionysis Philippas

Last modified: 2015-09-24

Abstract


Proposing a new econometric procedure based on Eubank and Speckman’s (Biometrika, 1990) polynomialtrigonometric regression, we test for long run convergence between trade flows in countries belonging to regional trading blocks, factoring seasonality and long term cyclical trends. Results indicate substantial cyclicality patterns missing in the existing procedures, rendering long run convergence questionable. Overall, trade block members do exhibit trade flow convergence, albeit only for specific periods. The establishment of Free Trade Areas (FTA) does not necessarily facilitate cross border trade convergence in several geographical areas, including the Mediterranean

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