Much empirical international trade reserach requires a careful analysis of bilateral trade patterns. In this paper we examine a commonly used technique called the gravity equation. Though the use of the gravity equation on aggregate data is well-grounded in monopolistic competition trade theory, we show that central predictions necessary for its derivation can be rejected with simple tests on disaggregated data.
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Paper provided by Purdue University, Krannert School of Management - Center for International Business Education and Research (CIBER) in its series Papers with number
97-002.
Length: 28 pages Date of creation: 1997 Date of revision: Handle: RePEc:fth:purkib:97-002
Contact details of provider: Postal: Purdue University, Center for International Business Education and Research, Krannert Graduate School of Management, 1310 Krannert Building West Lafayette, Indiana 47907-1310. Web page: http://www.krannert.purdue.edu/ More information through EDIRC
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Find related papers by JEL classification: F14 - International Economics - - Trade - - - Country and Industry Studies of Trade
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