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Aggregation bias, compositional change, and the border effect

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Author Info
Russell H. Hillberry

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Abstract

Borders affect the composition, not only the level, of interregional trade. In disaggregated U.S. Commodity Flow data, border effects vary substantially across commodities. Substantial border-induced compositional change suggests the possibility that standard estimates suffer from aggregation bias arising from endogenous industry location patterns and the presence of zero observations in commodity-level trade. Adjusting for these effects reduces the estimate of the aggregate border effect from 20.9 to 5.7.

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File URL: http://economics.ca/cgi/xms?jab=v35n3/06.pdf
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Publisher Info
Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 35 (2002)
Issue (Month): 3 (August)
Pages: 517-530
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Handle: RePEc:cje:issued:v:35:y:2002:i:3:p:517-530

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Related research
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Find related papers by JEL classification:
F14 - International Economics - - Trade - - - Country and Industry Studies of Trade
F15 - International Economics - - Trade - - - Economic Integration

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Russell Hillberry & David Hummels, 2002. "Explaining Home Bias in Consumption: The Role of Intermediate Input Trade," NBER Working Papers 9020, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. James E. Anderson & Eric van Wincoop, 2004. "Trade Costs," NBER Working Papers 10480, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. Kei-Mu Yi, 2008. "Can multi-stage production explain the home bias in trade?," Working Papers 08-12, Federal Reserve Bank of Philadelphia. [Downloadable!]
  4. Salvador Gil-Pareja & Rafael Llorca-Vivero & José A. Martínez-Serrano & Josep Oliver-Alonso, . "The Border Effect in Spain," Working Papers 2004-28, FEDEA. [Downloadable!]
    Other versions:
    • Salvador Gil-Pareja & Rafael Llorca-Vivero & José A. Martínez-Serrano & Josep Oliver-Alonso, 2005. "The Border Effect in Spain," The World Economy, Blackwell Publishing, vol. 28(11), pages 1617-1631, November. [Downloadable!] (restricted)
  5. Miriam Manchin & Anna Maria Pinna, 2003. "Border effects in the enlarged EU area," Working Paper CRENoS 200301, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia. [Downloadable!]
  6. Carolyn L. Evans, 2001. "Border effects and the availability of domestic products abroad," Staff Reports 127, Federal Reserve Bank of New York. [Downloadable!]
  7. Koike, Ryoji, 2004. "Japan's Foreign Direct Investment and Structural Changes in Japanese and East Asian Trade," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 22(3), pages 145-82, October. [Downloadable!]
  8. Kei-Mu Yi, 2005. "Vertical specialization and the border effect puzzle," Working Papers 05-24, Federal Reserve Bank of Philadelphia. [Downloadable!]
  9. Alessandro Olper & Valentina Raimondi, 2007. "Market access asymmetry in food trade," LICOS Discussion Papers 18707, LICOS - Centre for Institutions and Economic Performance, K.U.Leuven. [Downloadable!]
  10. Chen, Natalie, 2002. "Intra-national versus International Trade in the European Union: Why do National Borders Matter?," CEPR Discussion Papers 3407, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  11. John Whalley & Xian Xin, 2006. "Home and Regional Biases and Border Effects in Armington Type Models," NBER Working Papers 12439, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  12. Millimet, Daniel & Henderson, Daniel, 2006. "Is Gravity Linear?," Departmental Working Papers 0517, Southern Methodist University, Department of Economics. [Downloadable!]
    Other versions:
  13. Salvador Gil-Pareja & Rafael Llorca-Vivero & José Martínez-Serrano, 2006. "The border effect in Spain: The Basque Country case," Regional Studies, Taylor and Francis Journals, vol. 40(4), pages 335-345, June. [Downloadable!] (restricted)
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