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

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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 IHEID 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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Keywords: Border Effect; Gravity Equation; Transport Infrastructure;

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  1. 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.
  2. Charles Engel & John H. Rogers, 1995. "How wide is the border?," Research Working Paper 95-09, Federal Reserve Bank of Kansas City.
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  8. John F. Helliwell, 1995. "Do National Borders Matter for Quebec's Trade?," NBER Working Papers 5215, National Bureau of Economic Research, Inc.
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  16. Flam, Harry & Nordström, Håkan, 2006. "Trade Volume Effects of the Euro: Aggregate and Sector Estimates," Seminar Papers 746, Stockholm University, Institute for International Economic Studies.
  17. Alejandro Micco & Ernesto H. Stein & Guillermo Luis Ordoñez, 2003. "The Currency Union Effect on Trade: Early Evidence from EMU," Research Department Publications 4339, Inter-American Development Bank, Research Department.
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  1. Belgische splitsing
    by Thijs in eco.nomie.nl on 2008-09-11 12:00:32
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Cited by:
  1. Rico Ihle & Stephan von Cramon-Taubadel & Sergiy Zorya, 2011. "Measuring the Integration of Staple Food Markets in Sub-Saharan Africa: Heterogeneous Infrastructure and Cross Border Trade in the East African Community," CESifo Working Paper Series 3413, CESifo Group Munich.
  2. Marius Brülhart & Céline Carrère & Federico Trionfetti, 2011. "How Wages and Employment Adjust to Trade Liberalization: Quasi-Experimental Evidence from Austria," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 11.04, Université de Lausanne, Faculté des HEC, DEEP.
  3. Ihle, Rico & von Cramon-Taubadel, Stephan & Zorya, Sergiy, 2010. "Country and border effects in the transmission of maize prices in Eastern Africa: evidence from a semi-parametric regression model," 2010 AAAE Third Conference/AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa 96184, African Association of Agricultural Economists (AAAE) & Agricultural Economics Association of South Africa (AEASA).
  4. Claudia Buch & Paola Monti, 2010. "Openness and income disparities: does trade explain the “Mezzogiorno effect”?," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 145(4), pages 667-688, January.
  5. Helble, Matthias & Okubo, Toshihiro, 2008. "Heterogeneous quality firms and trade costs," Policy Research Working Paper Series 4550, The World Bank.

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