The Poisson quasi-maximum likelihood estimator: a solution to the ‘adding up’ problem in gravity models
AbstractThis article shows that the Poisson Quasi-Maximum Likelihood (QML) estimator applied to the gravity model produces estimates in which, summing across all partners, actual and estimated total trade flows are identical. Other methods such as OLS do not have this desirable property. Indeed, Poisson is the only QML estimator that preserves total trade flows. This result is an additional reason for preferring Poisson as a workhorse gravity model estimator.
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Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal Applied Economics Letters.
Volume (Year): 20 (2013)
Issue (Month): 6 (April)
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Web page: http://www.tandfonline.com/RAEL20
Other versions of this item:
- Arvis, Jean-Francois & Shepherd, Ben, 2011. "The Poisson quasi-maximum likelihood estimator: A solution to the “adding up” problem in gravity models," MPRA Paper 34334, University Library of Munich, Germany.
- C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
- F10 - International Economics - - Trade - - - General
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