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Candidacy Before Membership: Trade Effects in the Western Balkans A Structural Gravity and Event-Time Difference-in-Differences Study

Dzanic, Tarik LU (2025) NEKN01 20251
Department of Economics
Abstract
This thesis asks whether European Union candidacy, as an intermediate stage prior to
accession, increases bilateral trade between Western Balkan candidates and EU members.
The methodology combines a structural-gravity framework estimated by PPML with
a heterogeneity-robust staggered difference-in-differences event study, using directional
dyad–year goods trade for 2006–2019 and exporter×year, importer×year, and pair fixed
effects. The results indicate that candidacy is associated with a medium-termm expansion
of EU-candidate trade of roughly 17-18% on average, with gains emerging quickly after
candidacy and stabilizing thereafter. Various robustness checks are performed: alternative
sample compositions, timing windows, and... (More)
This thesis asks whether European Union candidacy, as an intermediate stage prior to
accession, increases bilateral trade between Western Balkan candidates and EU members.
The methodology combines a structural-gravity framework estimated by PPML with
a heterogeneity-robust staggered difference-in-differences event study, using directional
dyad–year goods trade for 2006–2019 and exporter×year, importer×year, and pair fixed
effects. The results indicate that candidacy is associated with a medium-termm expansion
of EU-candidate trade of roughly 17-18% on average, with gains emerging quickly after
candidacy and stabilizing thereafter. Various robustness checks are performed: alternative
sample compositions, timing windows, and restrictions on treatment-effect heterogeneity,
which support the headline effect. TWFE and ETWFE aggregates are statistically
indistinguishable in this application. Pretrend diagnostics are borderline at the 10% level
but not rejected at 5%, arguing for cautious interpretation of fine-grained dynamics and
focus on medium-run averages. Substantively, candidacy appears economically meaningful
by signalling credible accession prospects and front-loading regulatory alignment. (Less)
Please use this url to cite or link to this publication:
author
Dzanic, Tarik LU
supervisor
organization
course
NEKN01 20251
year
type
H1 - Master's Degree (One Year)
subject
keywords
EU candidacy, Western Balkans, structural gravity, PPML, staggered difference-in-differences.
language
English
id
9214101
date added to LUP
2025-12-08 08:38:59
date last changed
2025-12-08 08:38:59
@misc{9214101,
  abstract     = {{This thesis asks whether European Union candidacy, as an intermediate stage prior to
accession, increases bilateral trade between Western Balkan candidates and EU members.
The methodology combines a structural-gravity framework estimated by PPML with
a heterogeneity-robust staggered difference-in-differences event study, using directional
dyad–year goods trade for 2006–2019 and exporter×year, importer×year, and pair fixed
effects. The results indicate that candidacy is associated with a medium-termm expansion
of EU-candidate trade of roughly 17-18% on average, with gains emerging quickly after
candidacy and stabilizing thereafter. Various robustness checks are performed: alternative
sample compositions, timing windows, and restrictions on treatment-effect heterogeneity,
which support the headline effect. TWFE and ETWFE aggregates are statistically
indistinguishable in this application. Pretrend diagnostics are borderline at the 10% level
but not rejected at 5%, arguing for cautious interpretation of fine-grained dynamics and
focus on medium-run averages. Substantively, candidacy appears economically meaningful
by signalling credible accession prospects and front-loading regulatory alignment.}},
  author       = {{Dzanic, Tarik}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Candidacy Before Membership: Trade Effects in the Western Balkans A Structural Gravity and Event-Time Difference-in-Differences Study}},
  year         = {{2025}},
}