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  Effects of the North American Free Trade Agreement
Ricardo H. Cavazos-Cepeda and Gary D. Thompson
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  Abstract
 

The North American Free Trade Agreement (NAFTA) continues to be controversial. Using an econometric model of import demand and export supply, the effects of NAFTA on bilateral trade between NAFTA partners are estimated. The model accounts for NAFTA effects separately from the impacts of exchange rate movements between NAFTA members, growth in import demand due to changes in gross domestic product, and rest-of-the-world exchange rate effects. Quarterly time series data from 1986 to 2005 are employed. Counterfactual comparisons of model predictions indicate NAFTA has increased bilateral trade between the United States and Mexico. The effects of NAFTA on U.S.-Canadian and Canadian-Mexican trade are mixed and less pronounced.

 

 
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2011 Dept. of Agricultural & Resource Economics, The University of Arizona
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Last updated June 15, 2007
Document located at http://ag.arizona.edu/arec/pubs/researchpapers/abstract2007-01.html