Social and Behavioral Sciences Commons^™

Gatt/Wto Promotes Trade Strongly: Sample Selection And Model Specification, Xuepeng Liu

Faculty and Research Publications

Some recent empirical studies examine the impact of the GATT/WTO on trade. This paper investigates the sample selection bias and the gravity model specification issues in the literature. First, the GATT/WTO not only makes existing trading partners trade more at the intensive margin, but also creates new trading relationships at the extensive margin. Most existing papers exclude zero trade observations and hence ignore the extensive margin. Secondly, due to the violation of some maintained assumptions, the traditional log-linear gravity regressions fail to uncover the role of the GATT/WTO even at the intensive margin. Using a large bilateral panel dataset including …