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Trade in Services: Does Gravity Hold? A Gravity Model Approach to Estimating Barriers to Services Trade

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  • Keith Walsh

Abstract

This paper assesses the determinants of trade in services using a gravity model, with particular attention given to the role of barriers to services trade. Initially, the application of the gravity equation to services trade is examined. A variety of econometric estimators are tested and the Hausman-Taylor model is found to be the best estimator. The gravity model fits services trade flows in a similar manner to trade in goods. Wealth of countries and a common language are the most important determinants of services trade, distance is generally found to be insignificant. A variable measuring barriers to services trade is introduced into the gravity equation. Although the variable is only found to be weakly significant, a quantified set of tariff equivalents of those barriers is estimated.

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Bibliographic Info

Paper provided by IIIS in its series The Institute for International Integration Studies Discussion Paper Series with number iiisdp183.

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Date of creation: 16 Nov 2006
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Handle: RePEc:iis:dispap:iiisdp183

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References

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Citations

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Cited by:
  1. Miroudot, Sébastien & Sauvage, Jehan & Shepherd, Ben, 2012. "Trade costs and productivity in services sectors," Economics Letters, Elsevier, vol. 114(1), pages 36-38.
  2. Park, Innwon & Park, Soonchan, 2010. "Regional Liberalization of Trade in Services," MPRA Paper 19758, University Library of Munich, Germany.
  3. Alege, Philip & Ogundipe, Adeyemi, 2013. "The Role of Services Trade in Economic Development," MPRA Paper 51695, University Library of Munich, Germany.
  4. Cipollina, Maria & Salvatici, Luca, 2007. "Reciprocal trade agreements in gravity models: a meta-analysis," Economics & Statistics Discussion Papers esdp07035, University of Molise, Dept. EGSeI.
  5. Barry Eichengreen & Poonam Gupta, 2013. "Exports of services: Indian experience in perspective," Indian Growth and Development Review, Emerald Group Publishing, vol. 6(1), pages 35-60, March.
  6. Shingal, ANIRUDH, 2009. "How much do agreements matter for services trade?," MPRA Paper 32815, University Library of Munich, Germany, revised 15 May 2010.
  7. Minondo, Asier, 2012. "Trading firms in the Spanish services sector," MPRA Paper 43224, University Library of Munich, Germany.
  8. Erik Marel & Ben Shepherd, 2013. "Services Trade, Regulation and Regional Integration: Evidence from Sectoral Data," The World Economy, Wiley Blackwell, vol. 36(11), pages 1393-1405, November.
  9. Cardamone, Paola, 2007. "A survey of the assessments of the effectiveness of Preferential Trade Agreements using gravity models," Working Papers 7282, TRADEAG - Agricultural Trade Agreements.
  10. Shingal, Anirudh, 2013. "Revisiting the trade effects of services agreements," MPRA Paper 51243, University Library of Munich, Germany.
  11. Matthieu Crozet & Emmanuel Milet & Daniel Mirza, 2013. "The Discriminatory Effect of Domestic Regulations on International Trade in Services: Evidence from Firm-Level Data," Documents de travail du Centre d'Economie de la Sorbonne 13019, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
  12. Lionel Fontagné & Amélie Guillin & Cristina Mitaritonna, 2011. "Estimations of Tariff Equivalents for the Services Sectors," Working Papers 2011-24, CEPII research center.
  13. Miroudot, Sebastien & Shepherd, Ben, 2012. "The paradox of “preferences”: regional trade agreements and trade costs in services," MPRA Paper 41090, University Library of Munich, Germany.
  14. Claudio, Vicarelli & Carmine, Pappalardo, 2012. "Euro introduction and export behaviour of Italian firms," MPRA Paper 43386, University Library of Munich, Germany.
  15. Erik van der Marel, 2012. "Determinants of Comparative Advantage in Services," FIW Working Paper series 087, FIW.
  16. Bianka Dettmer, 2012. "The European Union's service directive: Contrasting ex ante estimates with empirical evidence," Jena Economic Research Papers 2012-019, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.

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