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Trading Partners and Trading Volumes: Implementing the Helpman-Melitz-Rubinstein Model Empirically

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  • J. M. C. Santos Silva
  • Silvana Tenreyro

Abstract

Helpman, Melitz, and Rubinstein (2008)-HMR-present a rich theoretical model to study the determinants of bilateral trade flows across countries. The model is then empirically implemented through a two-stage estimation procedure. This note seeks to clarify some econometric aspects of the estimation approach used by HMR and explore the consequences of possible departures from the maintained distributional assumptions.

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Bibliographic Info

Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0935.

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Date of creation: Jun 2009
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Handle: RePEc:cep:cepdps:dp0935

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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

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Keywords: Gravity equation; Heteroskedasticity; Jensens inequality;

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References

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  1. Chen, Songnian & Khan, Shakeeb, 2003. "Semiparametric Estimation Of A Heteroskedastic Sample Selection Model," Econometric Theory, Cambridge University Press, Cambridge University Press, vol. 19(06), pages 1040-1064, December.
  2. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, American Economic Association, vol. 93(1), pages 170-192, March.
  3. Elhanan Helpman & Marc Melitz & Yona Rubinstein, 2006. "Trading Partners and Trading Volumes," DEGIT Conference Papers c011_022, DEGIT, Dynamics, Economic Growth, and International Trade.
  4. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, Econometric Society, vol. 47(1), pages 153-61, January.
  5. Newey, Whitney K, 1985. "Maximum Likelihood Specification Testing and Conditional Moment Tests," Econometrica, Econometric Society, Econometric Society, vol. 53(5), pages 1047-70, September.
  6. J. M. C. Santos Silva & Silvana Tenreyro, 2006. "The Log of Gravity," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 641-658, November.
  7. Terza, Joseph V., 1998. "Estimating count data models with endogenous switching: Sample selection and endogenous treatment effects," Journal of Econometrics, Elsevier, Elsevier, vol. 84(1), pages 129-154, May.
  8. Elhanan Helpman & Marc Melitz & Yona Rubinstein, 2008. "Estimating Trade Flows: Trading Partners and Trading Volumes," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 123(2), pages 441-487, 05.
  9. Barnett,William A. & Powell,James & Tauchen,George E. (ed.), 1991. "Nonparametric and Semiparametric Methods in Econometrics and Statistics," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521370905.
  10. Barnett,William A. & Powell,James & Tauchen,George E. (ed.), 1991. "Nonparametric and Semiparametric Methods in Econometrics and Statistics," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521424318.
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Cited by:
  1. Asier Minondo & Francisco Requena-Silvente, 2011. "Estimating the gravity equation with the actual number of exporting firms," Working Papers, Department of Applied Economics II, Universidad de Valencia 1121, Department of Applied Economics II, Universidad de Valencia.
  2. Olivier CADOT & Anne-Cécilia DISDIER & Lionel FONTAGNÉ, 2012. "North-South Standards Harmonization and International Trade," Working Papers P42, FERDI.
  3. Peter Egger & Mario Larch & Kevin E. Staub & Rainer Winkelmann, 2010. "The Trade Effects of Endogenous Preferential Trade Agreements," SOI - Working Papers 1013, Socioeconomic Institute - University of Zurich.
  4. Rafael Cezar, 2011. "Newtoning financial development with heterogeneous firms," Working Papers, DIAL (Développement, Institutions et Mondialisation) DT/2011/12, DIAL (Développement, Institutions et Mondialisation).
  5. repec:hal:psewpa:hal-00961733 is not listed on IDEAS
  6. Harry Flam & Hakan Nordström, 2011. "Gravity Estimation of the Intensive and Extensive Margins of Trade: An Alternative Procedure with Alternative Data," CESifo Working Paper Series 3387, CESifo Group Munich.
  7. Cooke, Edgar F A, 2011. "The impact of trade preferences on exports of developing countries: the case of the AGOA and CBI preferences of the USA," MPRA Paper 31439, University Library of Munich, Germany.
  8. Benedikt Heid & Mario Larch, 2011. "Migration, Trade and Unemployment," Ifo Working Paper Series Ifo Working Paper No. 115, Ifo Institute for Economic Research at the University of Munich.
  9. repec:hal:journl:hal-00975529 is not listed on IDEAS
  10. Larch, Mario & Norbäck, Pehr-Johan & Sirries, Steffen & Urban, Dieter, 2013. "Heterogeneous Firms, Globalization and the Distance Puzzle," Working Paper Series, Research Institute of Industrial Economics 957, Research Institute of Industrial Economics.
  11. Kareem, Fatima O., 2014. "Modeling and Estimation of Gravity Equation in the Presence of Zero Trade: A Validation of Hypotheses Using Africa's Trade Data," 140th Seminar, December 13-15, 2013, Perugia, Italy, European Association of Agricultural Economists 163341, European Association of Agricultural Economists.
  12. Fatima Olanike Kareem & Olayinka Idowu Kareem, 2014. "Specification and Estimation of Gravity Models: A Review of the Issues in the Literature," RSCAS Working Papers, European University Institute 2014/74, European University Institute.

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