Journal
JOURNAL OF APPLIED ECONOMETRICS
Volume 27, Issue 5, Pages 773-794Publisher
WILEY
DOI: 10.1002/jae.1231
Keywords
-
Categories
Ask authors/readers for more resources
We derive a quantity-based structural gravity equation system in which both trade flows and error terms are cross-sectionally correlated. This system can be estimated using techniques borrowed from the spatial econometrics literature. To illustrate our methodology, we apply it to a well-known CanadaUS trade dataset. We find that border effects between the USA and Canada are smaller than suggested by previous studies: about 7.5 for Canadian provinces and about 1.3 for US states. Hence controlling directly for cross-sectional interdependence among both trade flows and error terms reduces measured border effects by capturing multilateral resistance. Copyright (c) 2010 John Wiley & Sons, Ltd.
Authors
I am an author on this paper
Click your name to claim this paper and add it to your profile.
Reviews
Recommended
No Data Available