Modeling Heterogeneous Direct and Third-Country Effects of the Trade Policy Network

The increasing number of international trade agreements, their varying content scope, and the diversity of members involved weave a complex web of trade linkages. It is well established that international trade liberalizations have positive aggregate trade, welfare and development effects.1 Recent research explores how the direct effects of trade agreements vary across countries and agreements and which channels define this variation. It is less understood, however, how the indirect, third-country effects of the network of trade agreements vary and what economic implications they have.