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Sectoral trade freeness and agglomeration in the EU: an empirical test approach

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Abstract

This paper studies the evolution of trade freeness and of the agglomeration of production, and their relationship at the sectoral level in a selected group of EU countries. Our main objectives are the search for stylized facts about their relationship and to check how our findings relate to the theoretical prediction about it in case of the home market effect. Our sectoral focus requires an original testing approach based on the combination of different bootstrap distributions. The results discussed show that a systematic relationship between trade freeness and agglomeration does not emerge at the sectoral level, this is true also for those sectors which support the home market effect hypothesis. Copyright Springer-Verlag Berlin Heidelberg 2015

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  • Gianluca Cafiso, 2015. "Sectoral trade freeness and agglomeration in the EU: an empirical test approach," Empirical Economics, Springer, vol. 48(2), pages 779-805, March.
    • Handle: RePEc:spr:empeco:v:48:y:2015:i:2:p:779-805
    DOI: 10.1007/s00181-014-0799-5
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    More about this item

    Keywords

    Trade freeness; Agglomeration of production; Home market effect; Home market magnification effect; Bootstrap; F10; F12; F15; C15;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F15 - International Economics - - Trade - - - Economic Integration
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General

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