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Disaggregated Trade Flows and the "Missing Globalization Puzzle"

Author

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  • Boriss Siliverstovs
  • Dieter Schumacher

Abstract

This study analyzes the stability of the distance coeffi cient values over time in the generalized gravity equation of Bergstrand (1989) using both aggregate and disaggregated trade fl ows among 22 OECD countries recorded for the sample period covering 1970 until 2000. First of all, we fi nd that the missing globalization puzzle, typically observed in empirical gravity models for aggregate trade fl ows, largely disappears when one estimates a gravity model using disaggregated trade data at the level of individual industries. Secondly, we document that accounting for multilateral price resistance alone can provide some evidence against the missing globalization puzzle. At the same time, the results obtained for a traditional specifi cation of the gravity equation emphasizing the importance of disaggregated trade fl ows in explaining the distance puzzle remain largely intact.

Suggested Citation

  • Boriss Siliverstovs & Dieter Schumacher, 2008. "Disaggregated Trade Flows and the "Missing Globalization Puzzle"," Economie Internationale, CEPII research center, issue 115, pages 141-164.
    • Handle: RePEc:cii:cepiei:2008-3te
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    File URL: http://www.cepii.fr/IE/rev115/ei115e.htm
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    Cited by:

    1. Lin, Faqin, 2013. "Are distance effects really a puzzle?," Economic Modelling, Elsevier, vol. 31(C), pages 684-689.
    2. Juyoung Cheong & Do Won Kwak & Kam Ki Tang, 2016. "The distance effects on the intensive and extensive margins of trade over time," Empirical Economics, Springer, vol. 50(2), pages 253-278, March.
    3. Bassem Kahouli & Anis Omri & Anissa Chaibi, 2014. "Environmental Regulations, Trade, and Foreign Direct Investment: Evidence from Gravity Equations," Working Papers 2014-189, Department of Research, Ipag Business School.
    4. Kahouli, Bassem & Omri, Anis, 2017. "Foreign direct investment, foreign trade and environment: New evidence from simultaneous-equation system of gravity models," Research in International Business and Finance, Elsevier, vol. 42(C), pages 353-364.
    5. MARKIANIDOU, Paresa & WEEREN, Arie, 2011. "Linear and nonlinear growth models using mixed modeling: An application on European import volumes," Working Papers 2011011, University of Antwerp, Faculty of Business and Economics.
    6. Samuel Standaert & Stijn Ronsse & Benjamin Vandermarliere, 2014. "Historical trade integration: Globalization and the distance puzzle in the long 20th century," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 14/897, Ghent University, Faculty of Economics and Business Administration.

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    Keywords

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    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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