Faculty of Economics and Business Administration Publications Database

A Bayesian spatial probit estimation of Free Trade Agreement contagion

Volume: 19
Number: 6
Pages: 579 - 583
Month: June
ISSN-Print: 1350-4851
Link External Source: Online Version
Year: 2012
Keywords: Contagion index; Free Trade Agreements; Spatial probit
Abstract: This article analyses the spatial interdependence of Free Trade Agreements (FTAs) in a cross-section framework using the Contagion Index proposed by Baldwin and Jaimovich (2010). A Bayesian heteroskedastic probit model is estimated, where a spatial lag is built based on the Contagion Index, finding evidence of interdependence related with a domino-like effect. I compare the results with other spatial specifications previously used in the literature.