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Gold Standard Gravity

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Author Info

  • James E. Anderson

    ()
    (Boston College)

  • Yoto V. Yotov

    (Drexel University)

Abstract

This paper provides striking confirmation of the restrictions of the structural gravity model of trade. Structural forces predicted by theory explain 95% of the variation of the fixed effects used to control for them in the recent gravity literature, fixed effects that in principle could reflect other forces. This validation opens avenues to inferring unobserved sectoral activity and multilateral resistance variables by equating fixed effects with structural gravity counterparts. Our findings also provide important validation of a host of general equilibrium comparative static exercises based on the structural gravity model.

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Bibliographic Info

Paper provided by Boston College Department of Economics in its series Boston College Working Papers in Economics with number 795.

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Date of creation: 30 Jan 2012
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Handle: RePEc:boc:bocoec:795

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Web page: http://fmwww.bc.edu/EC/
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Keywords: Gravity; Trade; Structural Gravity; Multilateral Resistance;

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References

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  1. Thierry Mayer & Soledad Zignago, 2011. "Notes on CEPII’s distances measures: The GeoDist database," Working Papers 2011-25, CEPII research center.
  2. Elhanan Helpman & Marc Melitz & Yona Rubinstein, 2008. "Estimating Trade Flows: Trading Partners and Trading Volumes," The Quarterly Journal of Economics, MIT Press, vol. 123(2), pages 441-487, 05.
  3. James E. Anderson & Yoto V. Yotov, 2010. "Specialization: Pro- and Anti-globalizing, 1990-2002," NBER Working Papers 16301, National Bureau of Economic Research, Inc.
  4. James E. Anderson, 2010. "The Gravity Model," NBER Working Papers 16576, National Bureau of Economic Research, Inc.
  5. Mayer, Thierry & Paillacar, Rodrigo & Zignago, Soledad, 2008. "TradeProd. The CEPII Trade, Production and Bilateral Protection Database: Explanatory Notes," MPRA Paper 26477, University Library of Munich, Germany.
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Cited by:
  1. Cipollina, Maria & Laborde, David & Salvatici, Luca, 2013. "Do Preferential Trade Policies (Actually) Increase Exports? An analysis of EU trade policies," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150177, Agricultural and Applied Economics Association.
  2. Blyde, Juan & Molina, Danielken, 2013. "Logistics Infrastructure and the International Location of Fragmented Production," MPRA Paper 45749, University Library of Munich, Germany.
  3. Joachim Jarreau, 2014. "Terms-of-Trade Impacts of Trade Agreements and the Choice of Trade Policy," Working Papers halshs-01023214, HAL.
  4. Prehn, Soren & Brummer, Bernhard & Glauben, Thomas, 2012. "Structural Gravity Estimation & Agriculture," 2012: New Rules of Trade?, December 2012, San Diego, California 142765, International Agricultural Trade Research Consortium.
  5. Yotov, Yoto, 2012. "A Simple Solution to the Distance Puzzle in International Trade," School of Economics Working Paper Series 2012-6, LeBow College of Business, Drexel University.
  6. Jonathan Timmis, . "The Internet and International Trade in Goods," Discussion Papers 12/03, University of Nottingham, School of Economics.
  7. Vincent BODART & Jean-François CARPANTIER, 2014. "Real Exchange Rates and Skills," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2014005, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  8. Keith Head & Thierry Mayer, 2013. "Gravity Equations: Workhorse, Toolkit, and Cookbook," Sciences Po Economics Discussion Papers 2013-02, Sciences Po Departement of Economics.
  9. Riccardo Chiarucci & Franco Ruzzenenti & Maria I. Loffredo, 2013. "Detecting spatial homogeneity in the world trade web with Detrended Fluctuation Analysis," Papers 1308.0526, arXiv.org, revised Nov 2013.
  10. Angela Abbate & Luca De Benedictis & Giorgio Fagiolo & Lucia Tajoli, 2012. "The International Trade Network in Space and Time," LEM Papers Series 2012/17, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  11. Joachim Jarreau, 2014. "Terms-of-Trade Impacts of Trade Agreements and the Choice of Trade Policy," AMSE Working Papers 1430, Aix-Marseille School of Economics, Marseille, France, revised 11 Jul 2014.
  12. Jonathan Timmis, . "The Internet and International Trade in Goods," Discussion Papers 12/08, University of Nottingham, GEP.
  13. Lastauskas, Povilas & Bičiūnaitė, Audrė, 2012. "Strategies for Deeper Integration: Case Study of the Baltics," MPRA Paper 43321, University Library of Munich, Germany.
  14. Cooke, Edgar F. A., 2012. "Is the impact of AGOA heterogeneous?," MPRA Paper 43277, University Library of Munich, Germany.
  15. Prehn, Sören & Brümmer, Bernhard & Glauben, Thomas, 2012. "Structural gravity estimation & agriculture," DARE Discussion Papers 1209, Georg-August University of Göttingen, Department of Agricultural Economics and Rural Development (DARE).

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