| Abstract: |
This paper uses an extended two-way fixed effects (ETWFE) estimator for
staggered difference in-differences to evaluate the impact of compliance with
the 1995 agreement on Trade-Related Aspects of Intellectual Property Rights
(TRIPS) on international trade. Utilizing various partial aggregation schemes
to summarize treatment effect heterogeneity across different dimensions, we
provide evidence that: (i) On average, compliance with the TRIPS agreement
have led to an increase of about 58 in trade among member countries; (ii) Our
results demonstrate significant heterogeneity across treatment-timing cohorts,
with relatively larger effects observed for those that complied with the
agreement earlier; (iii) The event-study estimates suggest that trade flows
exhibit a sustained positive response to TRIPS, rising for about 11 years
since the agreement's inception before eventually declining; (iv) The
conclusions based on aggregate trade flows remain valid across different
industries that exhibit greater sensitivity to intellectual property. In so
far, the existing literature have largely relied on conventional two-way fixed
effects (TWFE) regressions, which may yield biased estimates in a setting with
staggered treatment adoption and treatment effects heterogeneity. The
contribution of this paper is to use the recent heterogeneity-robust
difference in-differences methods to address the trade effects of TRIPS due to
its staggered pattern of compliance. |