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Intra-national home bias: New evidence from the United States commodity flow survey

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  • Martínez-San Román, Valeriano
  • Mateo-Mantecón, Ingrid
  • Sainz-González, Rubén

Abstract

This paper estimates the US intra-national home bias in trade using Poisson Pseudo-Maximum Likelihood methodology to complement and extend Wolf’s (2000) work. We use Wolf’s data from the 1993 Commodity Flow Survey (CFS) and add the 1997, 2002, 2007, and 2012 waves. We claim that Wolf’s home bias magnitude is overestimated due to the log-linearization of the gravity equation and the control for distance used in the cross-sectional study. Our results with panel data and latest econometric estimators show that the levels of US States home bias are in between 50% and 60% lower than in Wolf’s. However, since 2002 the home bias has experienced substantial growth, which suggests that the US market is less commercially integrated in 2012 than in 1993.

Suggested Citation

  • Martínez-San Román, Valeriano & Mateo-Mantecón, Ingrid & Sainz-González, Rubén, 2017. "Intra-national home bias: New evidence from the United States commodity flow survey," Economics Letters, Elsevier, vol. 151(C), pages 4-9.
    • Handle: RePEc:eee:ecolet:v:151:y:2017:i:c:p:4-9
    DOI: 10.1016/j.econlet.2016.11.038
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    2. Nawaraj S. Paudel & Sajal Lahiri, 2021. "Do politically and economically similar states in the U.S.A. trade more with each other?," Economics Bulletin, AccessEcon, vol. 41(3), pages 1541-1552.

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    More about this item

    Keywords

    Home bias; Gravity; Trade; United States; CFS; PPML;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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