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After a short review of recent developments in gravity modeling and an overview of the liberalization agreements in Europe, this paper measures the trade creation and diversion effects of major European agreements based on the results of a correctly specified triple-indexed gravity model with bilateral fixed effects. Discussion of the resulting trade creation and diversion focuses on the role of partner and non-partner country characteristics including size and relative factor endowments, as well as date, reciprocity, industry coverage, and rate of liberalization characteristics of the agreement. [ABSTRACT FROM AUTHOR]

Since McCallum's (1995) finding of surprisingly high border effects on trade between the US and Canada, there have been a number of studies on other parts of the world, and improvements made to the gravity model to measure this effect accurately. This paper suggests some other modifications to the model, and applies it to a region of the world that presents a distinctly interesting case. Changes in border effects of formerly socialist countries in Central and East Europe, and countries in the former Soviet Union are analyzed during 1976-2002 at country and sectoral levels, and also with respect to blocs of countries. A discussion on cross-country variations in border effects follows the computations. [ABSTRACT FROM AUTHOR]

The slow pace of multilateral negotiations has given a greater impetus to regional trade arrangements (RTA) as countries are eager to take advantage of welfare enhancing trade creation effect of trade liberalization. At the same time, this approach raises concerns as due their discriminatory nature, RTAs lead to welfare reducing trade diversion from third countries. The paper develops a modified triple-indexed gravity model to measure the trade creation and diversion effects of the preferential trade agreements in the Euro-Mediterranean region. The model is applied to different components of imports, since the welfare implications of each component is expected to be different. Using these measures, the paper proceeds to look for evidence for the Natural Trade Partners Theory using three definitions of natural partners. Results show that there is support for the theory when geographical distance or initial trade volumes are used to define naturalness only for intra-industry components. Stronger support is found when complementarity is used to identify natural partners. [ABSTRACT FROM AUTHOR]

Exports from transition countries to market economies have increased considerably since the fall of socialism. The countries of Central and Eastern Europe have generally been more successful in this regard than the countries of the Commonwealth of Independent States. There are also considerable differences between countries within both the CEEC and the CIS, however. The following paper uses a variety of measures to determine the factors behind these cross-country differences. [ABSTRACT FROM AUTHOR]

This paper modifies the two-industry, two-country Heckscher­Ohlin model with intermediate goods to decompose trade into its horizontal and vertical intra-industry, as well as inter-industry parts. Acknowledging that liberalization affects each type of trade differently, and that changes in each imply labor adjustment of different magnitudes, the paper analyzes the effects of widely observed asymmetries in liberalization policies. The paper concludes with the implications of the model for the liberalization between the East and the West through the Europe Agreements. [ABSTRACT FROM AUTHOR]