The Poisson quasi-maximum likelihood estimator: A solution to the “adding up” problem in gravity models
AbstractThis paper shows that the Poisson quasi-maximum likelihood estimator applied to the gravity model produces estimates in which, summing across all partners, actual and estimated total trade flows are identical. Other methods such as OLS do not have this desirable property. Indeed, Poisson is the only quasi-maximum likelihood estimator that preserves total trade flows. This result is an additional reason for preferring Poisson as a workhorse gravity model estimator.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 34334.
Date of creation: 25 Oct 2011
Date of revision:
International Trade; Gravity Model; Poisson; Quasi-Maximum Likelihood Estimator;
Other versions of this item:
- Jean-Fran�ois Arvis & Ben Shepherd, 2013. "The Poisson quasi-maximum likelihood estimator: a solution to the ‘adding up’ problem in gravity models," Applied Economics Letters, Taylor and Francis Journals, vol. 20(6), pages 515-519, April.
- C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
- F10 - International Economics - - Trade - - - General
This paper has been announced in the following NEP Reports:
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.:
- J. M. C. Santos Silva & Silvana Tenreyro, 2009.
"Further Simulation Evidence on the Performance of the Poisson Pseudo-Maximum Likelihood Estimator,"
CEP Discussion Papers
dp0933, Centre for Economic Performance, LSE.
- Santos Silva, J.M.C. & Tenreyro, Silvana, 2011. "Further simulation evidence on the performance of the Poisson pseudo-maximum likelihood estimator," Economics Letters, Elsevier, vol. 112(2), pages 220-222, August.
- J.M.C. Santos Silva & Silvana Tenreyro, 2009. "Further simulation evidence on the performance of the Poisson pseudo-maximum likelihood estimator," Economics Discussion Papers 666, University of Essex, Department of Economics.
- Arvis, Jean-François & Duval, Yann & Shepherd, Ben & Utoktham,Chorthip, 2013.
"Trade costs in the developing world : 1995 - 2010,"
Policy Research Working Paper Series
6309, The World Bank.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.