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Border Effect Estimates for France and Germany Combining International Trade and Intra-national Transport Flows

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Author Info
Matthias Helble () (IUHEI, The Graduate Institute of International Studies, Geneva)
Abstract

Since the seminal contribution of McCallum (1995) economists have tried to estimate the border effect for other countries than the US and Canada, but have been confronted with a key data problem: data on regional trade flows are extremely rare. The different approaches put forward to overcome this lack of information have been shown to hinge crucially on certain distance measures. The main purpose of this paper is to develop a method that allows us determining border effects with a high degree of accuracy in the absence of intra-national trade data. We show how to improve the estimation of border effects at the example of France and Germany using data on regional transportation flows. Our results indicate that France trades about eight times more and Germany about three times more with itself than with other EU countries compared to the predictions of the gravity equation.

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Paper provided by Economics Section, The Graduate Institute of International Studies in its series HEI Working Papers with number 13-2006.

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Length: 32
Date of creation: 25 Jan 2006
Date of revision: Jun 2006
Handle: RePEc:gii:giihei:heiwp13-2006

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Related research
Keywords: Border Effect; Gravity Equation; Transport Infrastructure;

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Find related papers by JEL classification:
F15 - International Economics - - Trade - - - Economic Integration

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Engel, Charles & Rogers, John H, 1996. "How Wide Is the Border?," American Economic Review, American Economic Association, vol. 86(5), pages 1112-25, December. [Downloadable!] (restricted)
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  2. Shang-Jin Wei, 1996. "Intra-National versus International Trade: How Stubborn are Nations in Global Integration?," NBER Working Papers 5531, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. McCallum, John, 1995. "National Borders Matter: Canada-U.S. Regional Trade Patterns," American Economic Review, American Economic Association, vol. 85(3), pages 615-23, June. [Downloadable!] (restricted)
  4. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March. [Downloadable!]
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  5. Keith Head & Thierry Mayer, 2002. "Illusory Border Effects: Distance Mismeasurement Inflates Estimates of Home Bias in Trade," Working Papers 2002-01, CEPII research center. [Downloadable!]
  6. Keith Head & Thierry Mayer, 2000. "Non-Europe: The magnitude and causes of market fragmentation in the EU," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 136(2), pages 284-314, June. [Downloadable!] (restricted)
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  7. Leamer, Edward E. & Levinsohn, James, 1995. "International trade theory: The evidence," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 26, pages 1339-1394 Elsevier. [Downloadable!] (restricted)
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  8. Chen, Natalie, 2002. "Intra-national versus International Trade in the European Union: Why do National Borders Matter?," CEPR Discussion Papers 3407, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  9. Volker Nitsch, 2000. "National borders and international trade: evidence from the European Union," Canadian Journal of Economics, Canadian Economics Association, vol. 33(4), pages 1091-1105, November. [Downloadable!] (restricted)
  10. Anderson, Michael A & Smith, Stephen L S, 1999. "Do National Borders Really Matter? Canada-US Regional Trade Reconsidered," Review of International Economics, Blackwell Publishing, vol. 7(2), pages 219-27, May.
  11. Alan Deardorff, 1998. "Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?," NBER Chapters, in: The Regionalization of the World Economy, pages 7-32 National Bureau of Economic Research, Inc. [Downloadable!]
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  12. Buch, Claudia M. & Kleinert, Jorn & Toubal, Farid, 2004. "The distance puzzle: on the interpretation of the distance coefficient in gravity equations," Economics Letters, Elsevier, vol. 83(3), pages 293-298, June. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Matthias Helble & Toshihiro Okubo, 2008. "Heterogeneous Quality Firms and Trade Costs," Discussion Paper Series 220, Research Institute for Economics & Business Administration, Kobe University. [Downloadable!]
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