Download or read book The Gravity Equation and the Interdependency of Trade Costs and International Trade written by Stephan Rudolph and published by . This book was released on 2011 with total page 115 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Gravity Equation and the Interdependency of Trade Costs and International Trade written by and published by . This book was released on 2011 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The gravity equation is probably the most important tool in international economics to explain and estimate trade flows. However, since the gravity equation is important for political decisions, it is very important to achieve reliable results from its empirical application. Thus, it is necessary to employ the gravity equation using a theoretically and empirically proper methodology. One important discussion addresses the implausibly high measures for the impact of trade cost proxies on exports that frequently appear, especially in older works. This problem became known as the "border puzzle" (Obstfeld and Rogoff, 2001). The aim of the study is to contribute to the discussion about the suitability of the gravity equation's empirical applications. The basic idea is that trade costs between two countries could additionally depend on the exports between these two countries and not only on the (more or less) exogenous proxy variables for trade costs, as they are normally used. In this study, a new theory of endogenous trade costs is provided which shows that iceberg trade costs are likely to depend on exports. An interaction between exports and trade costs (or the gravity function and a trade cost function) leads to a simultaneity problem. Moreover, this theory can be confirmed after estimating the gravity equation with an alternative econometric strategy: A simultaneous equation system using a theory-based index to compensate for the directly immeasurable trade. A further target of the study is in its use of the comprehensive trade cost index to compute "multilateral resistances" of countries to trade, introduced in the trend-setting work by Anderson and van Wincoop (2003). These multilateral resistances are necessary to retrieve unbiased results from empirical gravity equations. A methodology was developed to make the heretofore unknown index of multilateral resistances visible. The result of the simultaneity approach and the use of constructed data for bilateral and

Download or read book The Gravity Model in International Trade written by Peter A. G. van Bergeijk and published by Cambridge University Press. This book was released on 2010-06-10 with total page 373 pages. Available in PDF, EPUB and Kindle. Book excerpt: How do borders affect trade? Are cultural and institutional differences important for trade? Is environmental policy relevant to trade? How does one's income or wage relate to the fact that trade partners are nearby or far away? These are just some of the important questions that can be answered using the gravity model of international trade. This model predicts and explains bilateral trade flows in terms of the economic size and distance between trading partners (e.g. states, regions, countries, trading blocs). In recent years, there has been a surge of interest in this model and it is now one of the most widely applied tools in applied international economics. This book traces the history of the gravity model and takes stock of recent methodological and theoretical advances, including new approximations for multilateral trade resistance, insightful analyses of the measurement of economic distance and analyses of foreign direct investment.

Download or read book The Gravity Equation in International Trade written by Stephan Rudolph and published by Sudwestdeutscher Verlag Fur Hochschulschriften AG. This book was released on 2011-09 with total page 128 pages. Available in PDF, EPUB and Kindle. Book excerpt: The gravity equation is probably the most important tool in international economics to explain and estimate trade flows. However, since the gravity equation is important for political decisions, it is very important to achieve reliable results from its empirical application. One important discussion addresses the implausibly high measures for the impact of trade cost proxies on exports that frequently appear, especially in older works. The aim of the study is to contribute to the discussion about the suitability of the gravity equation's empirical applications. A new theory of endogenous trade costs is provided which shows that iceberg trade costs are likely to depend on exports. An interaction between exports and trade costs leads to a simultaneity problem. Moreover, this theory can be confirmed after estimating the gravity equation with an alternative econometric strategy: A simultaneous equation system using a theory-based index to compensate for the directly immeasurable trade costs. The result of the simultaneity approach and the use of constructed data for bilateral and multilateral trade costs is that the estimated direct effects of variables influencing exports decrease.

Download or read book The Gravity Equation in International Trade written by Thomas Chaney and published by . This book was released on 2013 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: The gravity equation in international trade is one of the most robust empirical finding in economics: bilateral trade between two countries is proportional to size, measured by GDP, and inversely proportional to the geographic distance between them. While the role of size is well understood, the role of distance remains a mystery. I propose the first explanation for the gravity equation in international trade, based on the emergence of a stable network of input-output linkages between firms. Over time, a firm acquires more suppliers and customers, which tend to be further away. I show that if, as observed empirically, (i) the distribution of firm sizes is well approximated by Zipf's law and (ii) larger firms export over longer distances on average, then aggregate trade is inversely proportional to distance. Data on firm level, sectoral, and aggregate trade support further predictions of the model.

Download or read book The Gravity Equation in International Trade written by Jeffrey Harold Bergstrand and published by . This book was released on 1981 with total page 598 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Gravity Equation for Micro Founded Trade Costs written by Stephan Rudolph and published by . This book was released on 2009 with total page 25 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Gravity and Heterogeneous Trade Cost Elasticities written by Natalie Chen and published by . This book was released on 2021 with total page 57 pages. Available in PDF, EPUB and Kindle. Book excerpt: How do trade costs affect international trade? This paper offers a new approach. We rely on a flexible gravity equation that predicts variable trade cost elasticities, both across and within country pairs. We apply this framework to popular trade cost variables such as currency unions, trade agreements, and WTO membership. While we estimate that these variables are associated with increased bilateral trade on average, we find substantial heterogeneity. Consistent with the predictions of our framework, trade cost effects are strong for 'thin' bilateral relationships characterised by small import shares, and weak or even zero for 'thick' relationships.

Download or read book International trade without CES estimating translog gravity written by Dennis Novy and published by . This book was released on 2012 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Gravity Distance and International Trade written by Scott L. Baier and published by . This book was released on 2017 with total page 76 pages. Available in PDF, EPUB and Kindle. Book excerpt: We review and interpret the main theoretical developments in the gravity literature from its very early, a-theoretical applications to the latest structural contributions. We also discuss challenges and implement methods to estimate empirical gravity equations. We finish with a presentation and examples of numerical simulations with the structural gravity model. Throughout the analysis we attempt to emphasize the links and importance of transportation costs for the trade literature and we outline avenues where we believe interdisciplinary contributions between the international trade and transportation economics fields will be most valuable.

Download or read book Estimating Gravity Equations with Endogeneous Trade Costs written by Stephan Rudolph and published by . This book was released on 2010 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Gravity Equation in International Trade written by Michele U. Fratianni and published by . This book was released on 2014 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This chapter offers a selective survey of the gravity equation (GE) in international trade. This equation started in the Sixties as a purely empirical proposition to explain bilateral trade flows, without little or no theoretical underpinnings. At the end of the Seventies, the GE was "legitimized" by a series of theoretical articles that demonstrated that the basic GE form was consistent with various models of trade flows. Empirical applications of GE expanded to cover a variety of issues, such as the impact of regional trade agreements, national borders and currency unions on trade, as well as the use of the equation to sort out the relative merit of alternative trade theories. A new wave of studies is now concentrating on the general equilibrium properties of the GE and finer econometrics points. The renewed interest of the academic profession in the development of the GE is undoubtedly driven by the equation's empirical success.

Download or read book Alternative Hypotheses and the Volume of Trade written by Jon Haveman and published by . This book was released on 2004 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine why the gravity equation works and the implications for its use. First, we demonstrate that the gravity equation as a statistical relationship can be generated from a model with incomplete specialization and trade costs. Second, we analyse the predominance of zero bilateral trade values as a 'puzzle' broadly inconsistent with the complete specialization models typically used to derive the gravity equation, but consistent with the alternative hypothesis of incomplete specialization. Third, we demonstrate that the explanation for why the gravity equation works has considerable relevance for how the gravity equation is interpreted and used and how we view bilateral trade.

Download or read book International Trade with Heterogeneous Firms and the Gravity Equation written by Sebastian Findeisen and published by . This book was released on 2008 with total page 106 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Gravity Equation in International Trade written by Michele Fratianni and published by . This book was released on 2007 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Econometric Analysis of European Food and Agricultural Trade in a Liberalized and Integrating Global Economy written by Heiko Dreyer and published by Cuvillier Verlag. This book was released on 2017-03-02 with total page 276 pages. Available in PDF, EPUB and Kindle. Book excerpt: As indicated by the high level of food prices and volatility thereof, the international food and agricultural trade has been characterized by increasing uncertainty in recent years. Macroeconomic fluctuations seem to affect food and agricultural markets more strongly than in the past. The liberalization of agricultural policy, especially in industrialized countries, and the integration of world markets expose actors on domestic as well as on foreign markets to increased exchange rate and price fluctuations. This book investigates the determinants of food and agricultural trade flows of European countries using various econometric approaches. Where each of the chapters focuses on a particular issue, the overall topic of the first part of this book is to identify by what means the trend towards general liberalization and especially European integration has affected the amount of bilateral trade. Moreover, in the second part the book investigates the strategic pricing behavior of European producers in a liberalized global economy and elaborates how this behavior effects trade flows.

Download or read book Gravity with History written by Peter Egger and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Countries trade more if they liberalized their trade relationship earlier. We derive a gravity equation featuring this path dependence due to sunk market-access costs that generate incumbency effects. We provide supporting evidence for the underlying mechanism and derive an augmented ACR formula (Arkolakis et al., 2012) for the gains from trade that accounts for incumbency effects. A quantification suggests our mechanism explains up to 25% of countries’ home shares, and the gains from trade are, on average, 10% larger when allowing for incumbency effects. The analysis further reveals novel distributional effects of trade, boosting real wages but reducing profits.