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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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Bibliographic Info

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. Baldwin, Richard E. & Skudelny, Frauke & Taglioni, Daria, 2005. "Trade effects of the euro: evidence from sectoral data," Working Paper Series 0446, European Central Bank.
  2. John F. Helliwell, 1999. "National Borders, Trade and Migration," NBER Working Papers 6027, National Bureau of Economic Research, Inc.
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  18. Berger, Helge & Nitsch, Volker, 2005. "Zooming Out: The Trade Effect of the EURO in Historical Perspective," Discussion Papers 2005/5, Free University Berlin, School of Business & Economics.
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Blog mentions

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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. Brülhart, Marius & Carrère, Céline & Trionfetti, Federico, 2011. "How Wages and Employment Adjust to Trade Liberalization: Quasi-Experimental Evidence from Austria," CEPR Discussion Papers 8430, C.E.P.R. Discussion Papers.
  2. 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).
  3. Claudia M. Buch & Paola Monti, 2008. "Openness and Income Dispaities: Does Trade Explain the 'Mezzogiorno' Effect?," IAW Discussion Papers 41, Institut für Angewandte Wirtschaftsforschung (IAW).
  4. Horácio C. Faustino & Nuno Carlos Leitão, 2011. "Fragmentation in the automobile manufacturing industry: evidence from Portugal," Journal of Economic Studies, Emerald Group Publishing, vol. 38(3), pages 287-300, July.
  5. 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.
  6. Helble, Matthias & Okubo, Toshihiro, 2008. "Heterogeneous quality firms and trade costs," Policy Research Working Paper Series 4550, The World Bank.

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