*The authors are lecturer, Applied Econometrics and Statistics, Wayne State University, Detroit, Michigan, and Professor, International Trade and Econometrics, North Dakota State University, Fargo, respectively. This is a revised version of a paper presented at the Western Economic Association International 67th Annual Conference, San Francisco, Calif., July 9–13, 1992, in a session organized by Kaz Miyagima, University of Washington, Seattle. Partial financial support came from the Minority Grant Program of Wayne State University and from the U.S. Department of Agriculture, Grant 90–34192–5675.
TRADE CREATION AND DIVERSION EFFECTS OF THE U.S.-CANADIAN FREE TRADE AGREEMENT
Article first published online: 2 JUL 2007
Contemporary Economic Policy
Volume 12, Issue 1, pages 12–23, January 1994
How to Cite
KAREMERA, D. and KOO, W. W. (1994), TRADE CREATION AND DIVERSION EFFECTS OF THE U.S.-CANADIAN FREE TRADE AGREEMENT. Contemporary Economic Policy, 12: 12–23. doi: 10.1111/j.1465-7287.1994.tb00408.x
- Issue published online: 2 JUL 2007
- Article first published online: 2 JUL 2007
This study empirically estimates and evaluates the economic benefits of the U.S. and Canadian Free Trade Agreement (FTA). Most past studies rely on aggregate data. The analysis here emphasizes the trade effects of removing tariff and nontariff barriers on each commodity group classified by the Standard International Trade Classification. Estimating the amount of trade expansion under FTA for both countries involves using the import demand elasticities from a dynamic demand model. Results show that U.S. imports from Canada are more sensitive to domestic, import, and world prices than are Canadian imports from the United States. U.S. imports from Canada would increase roughly £3.257 billion compared to the £2.432 billion increase for Canadian imports from the United States.