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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

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Abstract

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

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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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Related research
Keywords: Gravity equation; Heteroskedasticity; Jensen’s inequality;

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Find related papers by JEL classification:
C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Estimation
C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
F10 - International Economics - - Trade - - - General

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  1. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January. [Downloadable!] (restricted)
  2. William H. Greene, 1994. "Accounting for Excess Zeros and Sample Selection in Poisson and Negative Binomial Regression Models," Working Papers 94-10, New York University, Leonard N. Stern School of Business, Department of Economics.
  3. 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. [Downloadable!] (restricted)
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  4. Terza, Joseph V., 1998. "Estimating count data models with endogenous switching: Sample selection and endogenous treatment effects," Journal of Econometrics, Elsevier, vol. 84(1), pages 129-154, May. [Downloadable!] (restricted)
  5. James E. Anderson & Eric van Wincoop, 2000. "Gravity with Gravitas: A Solution to the Border Puzzle," Boston College Working Papers in Economics 485, Boston College Department of Economics. [Downloadable!]
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  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, 09. [Downloadable!] (restricted)
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