Year of Publication

2012

Degree Name

Doctor of Philosophy (PhD)

Document Type

Doctoral Dissertation

College

Business and Economics

Department

Economics

First Advisor

Dr. Josh Ederington

Abstract

This dissertation consists of three essays that examine the impact of various trade policies on the extensive (new trading relationships) and intensive (increase in trade of existing relationships) margins of trade, whereas past studies have been limited to aggregate trade flows. An inquiry into the extensive and intensive margins of trade reveals that total aggregate trade masks the heterogeneous trade creating effect of policy variables. Furthermore, this dissertation also takes into account the econometric issues that have plagued the traditional empirical model that analyzes the impact of these policies on trade.

The first chapter examines the impact of hosting and bidding for mega-events on exports. Rose & Spiegel (2011b) find that hosts and unsuccessful bidders (candidates) experience a similar positive impact on total aggregate exports. They attribute the Olympic effect to the signal a country sends when bidding to host the games. This chapter inquires whether this Olympic signal leads to new trading relationships or an increase in trade in existing relationships. The results indicate that only hosts (not candidates) experience a permanent increase in exports at the intensive margin. While hosting the Olympics is consistently correlated with a permanent deepening of existing trade relationships, it is at the expense of the number of trading relationships.

The second chapter examines the impact of the World Trade Organization (WTO) membership on the extensive and intensive margin of imports. Accounting for several estimation issues that have plagued the literature, results indicate that the benefit of the WTO is realized entirely through the extensive margin. The results are in line with the literature that attributes WTO to reducing market uncertainty through tariff binds rather than reduction, thus increasing entry in the export market even when the applied protection is unchanged.

The third chapter examines the impact of fiscal episodes (fiscal stimuli and consolidation) on the extensive and intensive margins of exports. The results indicate that fiscal consolidation leads to an increase in total exports, while a fiscal stimulus leads to a decrease in total exports. Furthermore, fiscal consolidation leads to an increase in exports solely through the extensive margin.

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