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Intra-European Trade of Manufacturing Goods: An Extension of the Gravity Model

  • Mark Vancauteren

    ()

    (Universiteit Hasselt)

  • Daniel Weiserbs

    ()

    (Université catholique de Louvain)

In this paper, we propose and test several extensions of the standard gravity model. This yields a specification that allows for (i) a more flexible income response; (ii) a competitiveness effect with a general and a specific component; and (iii) an alternative and consistent measure of remoteness. Those extensions were found to be significant factors to explain intra-EU trade. Next, we analyze the effect of EU harmonization of technical regulations on domestic and intra-EU trade. We find, at different levels of aggregation of the manufacturing sector, that harmonization of regulations has contributed to more intra-EU trade but, apparently, did not affect the so called border effect.

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Article provided by Econometric Research Association in its journal International Econometric Review.

Volume (Year): 3 (2011)
Issue (Month): 1 (April)
Pages: 1-24

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Handle: RePEc:erh:journl:v:3:y:2011:i:1:p:1-24
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