Regional integration and trade: A panel cointegration approach to estimating the gravity model
Using a panel data set of bilateral export flows from 12 European Union (EU) countries to 20 Organisation for Economic Co-operation and Development (OECD) trading partners over the period 1992-2003, a panel cointegration approach to estimating the gravity model is adopted to test for the significance of European regional integration. A comparison of the results indicates that a positive and significant coefficient estimate of the EU dummy variable is found for both the pooled ordinary least squares (POLS) estimator and the dynamic ordinary least squares (DOLS) estimator. The results, however, diverge once fixed effects are admitted into the model. The least squares dummy variable (LSDV) estimator suggests a small positive effect of EU integration on trade. In contrast, the dynamic LSDV estimator indicates that regional integration has a larger beneficial effect on trade. The results highlight the fundamental importance of properly accounting for endogeneity when evaluating trade policy effects.
Volume (Year): 20 (2011)
Issue (Month): 1 ()
|Contact details of provider:|| Web page: http://www.tandfonline.com/RJTE20|
|Order Information:||Web: http://www.tandfonline.com/pricing/journal/RJTE20|
When requesting a correction, please mention this item's handle: RePEc:taf:jitecd:v:20:y:2011:i:1:p:53-65. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.