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

Author Info

  • Mark Vancauteren

    ()

    (Universiteit Hasselt)

  • Daniel Weiserbs

    ()

    (Université catholique de Louvain)

Abstract

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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Keywords: Trade; EU Countries; Gravity Equation; Border Effects.;

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Find related papers by JEL classification:
  • 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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  17. Bergstrand, Jeffrey H, 1985. "The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence," The Review of Economics and Statistics, MIT Press, vol. 67(3), pages 474-81, August.
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  21. Paul S. Armington, 1969. "A Theory of Demand for Products Distinguished by Place of Production (Une théorie de la demande de produits différenciés d'après leur origine) (Una teoría de la demanda de productos distinguiénd," IMF Staff Papers, Palgrave Macmillan, vol. 16(1), pages 159-178, March.
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Cited by:

  1. Ederington,Josh & Ruta,Michele, 2016. "Non-tariff measures and the world trading system," Policy Research Working Paper Series 7661, The World Bank.
  2. Joseph A. Clougherty & Michał Grajek, 2012. "International Standards and International Trade: Empirical Evidence from ISO 9000 Diffusion," NBER Chapters, in: Standards, Patents and Innovations National Bureau of Economic Research, Inc.
  3. Joseph A. Clougherty & Michal Grajek, 2009. "ISO 9000: New form of protectionism or common language in international trade?," ESMT Research Working Papers ESMT-09-006, ESMT European School of Management and Technology.
  4. Foletti, Liliana & Shingal, Anirudh, 2014. "Trade effects of MRL harmonization in the EU," Papers 720, World Trade Institute.

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