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Melting constants in trade gravity’s rainbow

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  • Blank, Sven
  • Egger, Peter H.

Abstract

Customary empirical gravity models are parametric and rely on the assumption that exports from country i to j depend on an additive index of three components: i-specific supply potential which is common across importers j; j-specific demand potential which is common across exporters i; and bilateral trade frictions which are indexed by ij and common within ij in a generic period. We demonstrate that the data reject the constancy of these components within category. The variation of trade-agreement-depth effects within category across country pairs and time is striking.

Suggested Citation

  • Blank, Sven & Egger, Peter H., 2021. "Melting constants in trade gravity’s rainbow," Economics Letters, Elsevier, vol. 201(C).
    • Handle: RePEc:eee:ecolet:v:201:y:2021:i:c:s016517652100080x
    DOI: 10.1016/j.econlet.2021.109803
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    References listed on IDEAS

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    More about this item

    Keywords

    Gravity model; Trade flows; Deep trade integration; Panel data; Non-parametric econometrics;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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