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Comparing alternative methods to estimate gravity models of bilateral trade

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  • Estrella Gómez Herrera

    ()
    (Department of Economic Theory and Economic History, University of Granada.)

Abstract

The gravity equation has been traditionally used to predict trade flows across countries. However, several problems related with its empirical application still remain unsolved. In this paper, I provide a survey of the recent literature concerning the specification and estimation methods of this equation. In addition, I compare the performance of two widely extended estimators, panel OLS and Poisson Pseudo Maximum Likelihood (PPML), for a dataset covering 80% of world trade.

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File URL: http://www.ugr.es/~teoriahe/RePEc/gra/wpaper/thepapers10_05.pdf
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Bibliographic Info

Paper provided by Department of Economic Theory and Economic History of the University of Granada. in its series ThE Papers with number 10/05.

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Length: 29 pages
Date of creation: 01 Sep 2010
Date of revision:
Handle: RePEc:gra:wpaper:10/05

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Keywords: International trade; Gravity model; Estimation methods;

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References

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Cited by:
  1. Umber, Marc P. & Grote, Michael H. & Frey, Rainer, 2014. "Same as it ever was? Europe's national borders and the market for corporate control," Journal of International Money and Finance, Elsevier, vol. 40(C), pages 109-127.
  2. Cooke, Edgar F A, 2011. "The impact of trade preferences on exports of developing countries: the case of the AGOA and CBI preferences of the USA," MPRA Paper 31439, University Library of Munich, Germany.
  3. Pierucci, Eleonora & Pericoli, Filippo & Ventura, Luigi, 2014. "Reassessing international investment patterns: a revisitation of Lane and Milesi-Ferretti's evidence," MPRA Paper 53585, University Library of Munich, Germany.

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