This paper provides new estimates of the effects of ethnic networks on U.S. exports. In line with recent research, our dataset is a panel of exports from U.S. states to 29 foreign countries. Our analysis departs from the literature in two ways, both of which show that previous estimates of the ethnic-network elasticity of trade are sensitive to the restrictions imposed on the estimated models. Our first departure is to control for unobserved heterogeneity with properly specified fixed effects, which we can do because our dataset contains a time dimension absent from previous studies. Our second departure is to remove the restriction that the network effect is the same for all ethnicities. We find that ethnic-network effects are much larger than has been estimated previously, although they are important only for a subset of countries.
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Paper provided by Federal Reserve Bank of St. Louis in its series Working Papers with number
2005-069.
Length: Date of creation: 2007 Date of revision: Publication status: Published in Review of International Economics, February 2008, 16(1), pp. 199-213 Handle: RePEc:fip:fedlwp:2005-069
Subhayu Bandyopadhyay & Cletus C. Coughlin & Howard J. Wall, 2005.
"Ethnic Networks and U.S. Exports,"
Working Papers
05-15, Department of Economics, West Virginia University.
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