Evidence_EconomiesScale

Evidence for other model predicons 1 the gravity

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Unformatted text preview: ains from trade & adjustment costs: Case Study: North American Free Trade Agreement (NAFTA) II.  Evidence for other model predic/ons: 1.  The Gravity Equa/on: large countries trade more 2.  Intra ­Industry Trade Empirical Evidence: NAFTA (1994) Gains and costs for CANADA: •  The poten/al for Canadian firms to expand output was a key factor in Canada s free ­trade agreement with the U.S. •  Data from 1988–1996 was used to es/mate effects of the Canada ­ U.S. Free Trade Agreement. •  Long run: large posi7ve effects on produc7vity –  15% over eight years in industries most aff...
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