Theo S. Eicher, Christian Henn, and Chris Papageorgiou, "Trade Creation and Diversion Revisited: Accounting for Model Uncertainty and Natural Trading Partner Effects", Journal of Applied Econometrics, Vol. 27, No. 2, 2012, pp. 296-321. ******************************************* Overview ******************************************* The file ehp-data.zip contains a total of three files, two of which are the two datasets used in the paper: Data_Spec1.txt: Dataset used for Specification 1 CountryCodes_Spec1.txt: File which converts the numerical country codes used in Data_Spec1.txt to 3-letter ISO codes Data_OtherSpecs.txt: Extended dataset used in all specifications other than Specification 1 These are all ASCII files in DOS format. Unix/Linux users should use "unzip -a". The content of the data files is described further below. ********************************************* Description of data used for Specification 1 ********************************************* The file Data_Spec1.txt contains the data used in Specification 1. It is the original Ghosh and Yamarik (GY, 2004) dataset adjusted to correct for the following: (1) Guyana joined Caricom in 1973, instead of 1995 as coded by GY. (2) The Asean Free Trade Agreement took effect in 1992, while GY coded it as starting in 1980. (3) Chile left the Andean Pact in 1976, while GY coded it as remaining a member throughout. The data sources are carefully listed in Ghosh and Yamarik (2004), Appendix C. The dataset consists of 14522 observations at 5 year intervals from 1970 to 1995. The data series are arranged in columns as follows: Descriptive variables: year - Year of observation cty1 - Numerical identifier of first nation in trading pair (see file CountryCodes_Spec1.txt for conversion of numerical code to 3-letter ISO code) cty2 - Numerical identifier of second nation in trading pair (see file CountryCodes_Spec1.txt for conversion of numerical code to 3-letter ISO code) Dependent variable: ltrade - Log of bilateral real average trade Non-PTA control variables: ldist - Log of bilateral distance comlang - 0-1 dummy for common language comcol - 0-1 dummy for common colonizer colonial - 0-1 dummy (1 if one country was a former colony of the other) lremote - Remoteness (the product of the average distance of each country from all trading partners other than the other country) border - 0-1 dummy for common land border landlock - 0-1-2 dummy for the number of landlocked trading partners lareap - Log of the product of the surface area of the two countries island - 0-1-2 dummy for the number of trading partners that are islands lrgdp - Log of the product of real GDP lrgdppc - Log of the product of real GDP per capita cu - 0-1 dummy for a common currency union sachss - 0-1-2 dummy giving the sum of the Sachs-Warner index of an open trade policy of both countries floatc - 0-1-2 dummy giving the number of countries with a floating exchange rate volatd - The standard deviation of the first difference in the bilateral exchange rate in the previous five years lgdppcd - The absolute log difference of real GDP per capita lschool - The absolute log difference in the average years of secondary schooling in the 25+ population ldensity - The absolute log difference in population density Trade creation dummies: MX_nafta - 0-1 dummy: 1 if both countries are NAFTA members MX_eu - 0-1 dummy: 1 if both countries are EU members MX_efta - 0-1 dummy: 1 if both countries are EFTA members MX_eea - 0-1 dummy: 1 if both countries are EEA members MX_caricom - 0-1 dummy: 1 if both countries are CARICOM members MX_ap - 0-1 dummy: 1 if both countries are Andean Pact members MX_mercosur - 0-1 dummy: 1 if both countries are MERCOSUR members MX_asean92 - 0-1 dummy: 1 if both countries are ASEAN Free Trade Agreement members MX_anzcerta - 0-1 dummy: 1 if both countries are ANZCERTA members MX_apec - 0-1 dummy: 1 if both countries are APEC members MX_laia - 0-1 dummy: 1 if both countries are LAIA members MX_cacm - 0-1 dummy: 1 if both countries are CACM members Trade diversion/Open bloc dummies: TD_nafta - 0-1 dummy: 1 if only one country is a NAFTA member TD_eu - 0-1 dummy: 1 if only one country is an EU member TD_efta - 0-1 dummy: 1 if only one country is an EFTA member TD_eea - 0-1 dummy: 1 if only one country is an EEA member TD_caricom - 0-1 dummy: 1 if only one country is a CARICOM member TD_ap - 0-1 dummy: 1 if only one country is an Andean Pact member TD_mercosur - 0-1 dummy: 1 if only one country is a MERCOSUR member TD_asean92 - 0-1 dummy: 1 if only one country is an ASEAN Free Trade Agreement member TD_anzcerta - 0-1 dummy: 1 if only one country is an ANZCERTA member TD_apec - 0-1 dummy: 1 if only one country is an APEC member TD_laia - 0-1 dummy: 1 if only one country is a LAIA member TD_cacm - 0-1 dummy: 1 if only one country is a CACM member ****************************************************** Description of data used for all other Specifications ****************************************************** The file Data_Spec2.txt contains the dataset used in all specifications other than Specification 1. These specifications (2-6 and 4a-6a) use an extended dataset developed based on Subramanian and Wei (2007) and consisting of 37983 observations at 5 year intervals from 1960 to 2000. Data sources for variables not related to preferential trade agreements (PTAs) are carefully listed in Table 2c of our paper. PTA variables are constructed based on Tables 2a and 2b. The data series are arranged in columns as follows: Descriptive variables: year - Year of observation im - IFS code of importer ex - IFS code of exporter Dependent variable: lnimport - log of bilateral imports (current US dollars) Non-PTA control variables: ldist - Log of bilateral distance comlang - 0-1 dummy for common language comcol - 0-1 dummy for common colonizer colony - 0-1 dummy (1 if one country was a former colony of the other) lprdctremoteij - Remoteness (the log of the product of the average distance, weighed by relative GDP, of each country from all trading partners) border - 0-1 dummy for common land border landlockij - 0-1-2 dummy for the number of landlocked trading partners lprdctareaij - Log of the product of the surface area of the two countries islandij - 0-1-2 dummy for the number of trading partners that are islands lprdctgdpij - Log of the product of nominal GDP lprdctgdppcij - Log of the product of real GDP per capita cu - 0-1 dummy for a common currency union sachsij - 0-1-2 dummy giving the sum of the Sachs-Warner index of an open trade policy of both countries floatij - 0-1-2 dummy giving the number of countries with a floating exchange rate vola3 - The standard deviation of the first difference in the bilateral exchange rate in the previous three years diffgdppc - The absolute log difference of real GDP per capita diffsecschool25 - The absolute log difference in the average years of secondary schooling in the 25+ population diffdensity - The absolute log difference in population density Trade creation dummies (used in Specifications 2-6): MX_nafta - 0-1 dummy: 1 if both countries are NAFTA members MX_eu - 0-1 dummy: 1 if both countries are EU members MX_efta - 0-1 dummy: 1 if both countries are EFTA members MX_eea - 0-1 dummy: 1 if both countries are EEA members MX_caricom - 0-1 dummy: 1 if both countries are CARICOM members MX_ap - 0-1 dummy: 1 if both countries are Andean Pact members MX_mercosur - 0-1 dummy: 1 if both countries are MERCOSUR members MX_asean92 - 0-1 dummy: 1 if both countries are ASEAN Free Trade Agreement members MX_anzcerta - 0-1 dummy: 1 if both countries are ANZCERTA members MX_apec - 0-1 dummy: 1 if both countries are APEC members MX_laia - 0-1 dummy: 1 if both countries are LAIA members MX_cacm - 0-1 dummy: 1 if both countries are CACM members MX_bi - 0-1: 1 if both countries are in a joint bilateral trade agreement Trade diversion/Open bloc dummies (used in Specification 2 only): TD_nafta - 0-1 dummy: 1 if only one country is a NAFTA member TD_eu - 0-1 dummy: 1 if only one country is an EU member TD_efta - 0-1 dummy: 1 if only one country is an EFTA member TD_eea - 0-1 dummy: 1 if only one country is an EEA member TD_caricom - 0-1 dummy: 1 if only one country is a CARICOM member TD_ap - 0-1 dummy: 1 if only one country is an Andean Pact member TD_mercosur - 0-1 dummy: 1 if only one country is a MERCOSUR member TD_asean92 - 0-1 dummy: 1 if only one country is an ASEAN Free Trade Agreement member TD_anzcerta - 0-1 dummy: 1 if only one country is an ANZCERTA member TD_apec - 0-1 dummy: 1 if only one country is an APEC member TD_laia - 0-1 dummy: 1 if only one country is a LAIA member TD_cacm - 0-1 dummy: 1 if only one country is a CACM member TD_bi - 0-1: 1 if only one country is member of a bilateral trade agreement Variables used for accession dynamics (Specifications 4a-6a): PTA pre-accession dummies (t-1): MXom1_nafta - 0-1 dummy: 1 for 5 year period before both countries became joint NAFTA members MXom1_eu - 0-1 dummy: 1 for 5 year period before both countries became joint EU members MXom1_efta - 0-1 dummy: 1 for 5 year period before both countries became joint EFTA members MXom1_eea - 0-1 dummy: 1 for 5 year period before both countries became joint EEA members MXom1_caricom - 0-1 dummy: 1 for 5 year period before both countries became joint CARICOM members MXom1_ap - 0-1 dummy: 1 for 5 year period before both countries became joint Andean Pact members MXom1_mercosur - 0-1 dummy: 1 for 5 year period before both countries became joint MERCOSUR members MXom1_asean92 - 0-1 dummy: 1 for 5 year period before both countries became joint ASEAN Free Trade Agreement members MXom1_anzcerta - 0-1 dummy: 1 for 5 year period before both countries became joint ANZCERTA members MXom1_apec - 0-1 dummy: 1 for 5 year period before both countries became joint APEC members MXom1_laia - 0-1 dummy: 1 for 5 year period before both countries became joint LAIA members MXom1_cacm - 0-1 dummy: 1 for 5 year period before both countries became joint CACM members MXom1_bi - 0-1: 1 for 5 year period before both countries became joint members of a bilateral trade agreement PTA accession dummies (t): MXo_nafta - 0-1 dummy: 1 for first year in which both countries were joint NAFTA members MXo_eu - 0-1 dummy: 1 for first year in which both countries were joint EU members MXo_efta - 0-1 dummy: 1 for first year in which both countries were joint EFTA members MXo_eea - 0-1 dummy: 1 for first year in which both countries were joint EEA members MXo_caricom - 0-1 dummy: 1 for first year in which both countries were joint CARICOM members MXo_ap - 0-1 dummy: 1 for first year in which both countries were joint Andean Pact members MXo_mercosur - 0-1 dummy: 1 for first year in which both countries were joint MERCOSUR members MXo_asean92 - 0-1 dummy: 1 for first year in which both countries were joint ASEAN Free Trade Agreement members MXo_anzcerta - 0-1 dummy: 1 for first year in which both countries were joint ANZCERTA members MXo_apec - 0-1 dummy: 1 for first year in which both countries were joint APEC members MXo_laia - 0-1 dummy: 1 for first year in which both countries were joint LAIA members MXo_cacm - 0-1 dummy: 1 for first year in which both countries were joint CACM members MXo_bi - 0-1: 1 for first year in which both countries were joint members of a bilateral trade agreement PTA post-accession dummies (t+1, n): MXp1_nafta - 0-1 dummy: 1 for all years >5 years after accession in which both countries were joint NAFTA members MXp1_eu - 0-1 dummy: 1 for all years >5 years after accession in which both countries were joint EU members MXp1_efta - 0-1 dummy: 1 for all years >5 years after accession in which both countries were joint EFTA members MXp1_eea - 0-1 dummy: 1 for all years >5 years after accession in which both countries were joint EEA members MXp1_caricom - 0-1 dummy: 1 for all years >5 years after accession in which both countries were joint CARICOM members MXp1_ap - 0-1 dummy: 1 for all years >5 years after accession in which both countries were joint Andean Pact members MXp1_mercosur - 0-1 dummy: 1 for all years >5 years after accession in which both countries were joint MERCOSUR members MXp1_asean92 - 0-1 dummy: 1 for all years >5 years after accession in which both countries were joint ASEAN Free Trade Agreement members MXp1_anzcerta - 0-1 dummy: 1 for all years >5 years after accession in which both countries were joint ANZCERTA members MXp1_apec - 0-1 dummy: 1 for all years >5 years after accession in which both countries were joint APEC members MXp1_laia - 0-1 dummy: 1 for all years >5 years after accession in which both countries were joint LAIA members MXp1_cacm - 0-1 dummy: 1 for all years >5 years after accession in which both countries were joint CACM members MXp1_bi - 0-1: 1 all years >5 years after accession in which both countries were joint members of a bilateral trade agreement ******************************************* Technical Implementation ******************************************* The estimation was undertaken using the open source R software, publicly available free of charge at http://www.r-project.org. After downloading the R software, the additionally needed BMA package can easily be installed through the "Packages" toolbar within R. ******************************************* References ******************************************* Ghosh, S., and S. Yamarik, 2004. "Are regional trading arrangements trade creating? An application of extreme bounds analysis", Journal of International Economics, 63, pp. 369-395. Subramanian, A., and S. Wei, 2007. "The WTO promotes trade, strongly but unevenly", Journal of International Economics, 72, pp. 151-175.