Disaggregated Trade Flows and the "Missing Globalization Puzzle"
AbstractThis study analyzes the stability of the distance coeffi cient values over time in the generalized gravity equation of Bergstrand (1989) using both aggregate and disaggregated trade fl ows among 22 OECD countries recorded for the sample period covering 1970 until 2000. First of all, we fi nd that the missing globalization puzzle, typically observed in empirical gravity models for aggregate trade fl ows, largely disappears when one estimates a gravity model using disaggregated trade data at the level of individual industries. Secondly, we document that accounting for multilateral price resistance alone can provide some evidence against the missing globalization puzzle. At the same time, the results obtained for a traditional specifi cation of the gravity equation emphasizing the importance of disaggregated trade fl ows in explaining the distance puzzle remain largely intact.
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Bibliographic InfoArticle provided by CEPII research center in its journal Economie Internationale.
Volume (Year): (2008)
Issue (Month): 115 ()
Gravity model; missing globalization puzzle; distance coefficient; multilateral resistance;
Other versions of this item:
- Boriss Siliverstovs & Dieter Schumacher, 2008. "Disaggregated Trade Flows and the “Missing Globalization Puzzle”," KOF Working papers 08-209, KOF Swiss Economic Institute, ETH Zurich.
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
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