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Disappearing Borders in the Visegrad Countries

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  • Ádám Márkus

Abstract

The aim of this paper is to evaluate the trade integration process of the Visegrad countries from a special point of view, namely by estimating border effects in the countries. The regressional analysis run with two different estimators (OLS vs. PPML) on two different model specifications suggests that between 1995 and 2011 the V4 countries were integrating continuously into the Single Market of the European Union. The results also show that the size of border effect is fairly sensitive to the estimator and particularly to the specification chosen by the researcher. According to the country-level estimation, Hungary seems to be the most integrated country getting the lowest home bias parameters followed by the Czech Republic, Slovakia and Poland, respectively.

Suggested Citation

  • Ádám Márkus, 2018. "Disappearing Borders in the Visegrad Countries," Prague Economic Papers, Prague University of Economics and Business, vol. 2018(2), pages 149-168.
    • Handle: RePEc:prg:jnlpep:v:2018:y:2018:i:2:id:635:p:149-168
    DOI: 10.18267/j.pep.635
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    References listed on IDEAS

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    1. Thierry Mayer & Keith Head, 2002. "Illusory Border Effects: Distance Mismeasurement Inflates Estimates of Home Bias in Trade," Working Papers 2002-01, CEPII research center.
    2. Chen, Natalie, 2004. "Intra-national versus international trade in the European Union: why do national borders matter?," Journal of International Economics, Elsevier, vol. 63(1), pages 93-118, May.
    3. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
    4. Russell Hillberry & David Hummels, 2003. "Intranational Home Bias: Some Explanations," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 1089-1092, November.
    5. Jonathan Eaton & Samuel Kortum, 2002. "Technology, Geography, and Trade," Econometrica, Econometric Society, vol. 70(5), pages 1741-1779, September.
    6. Carlos Llano‐Verduras & Asier Minondo & Francisco Requena‐Silvente, 2011. "Is the Border Effect an Artefact of Geographical Aggregation?," The World Economy, Wiley Blackwell, vol. 34(10), pages 1771-1787, October.
    7. Andrew K. Rose & Eric van Wincoop, 2001. "National Money as a Barrier to International Trade: The Real Case for Currency Union," American Economic Review, American Economic Association, vol. 91(2), pages 386-390, May.
    8. Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-116, March.
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    More about this item

    Keywords

    border effect; Visegrad countries; gravity model; market integration; PPML;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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