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The Pattern Of Bilateral Trade Using A Dynamic Gravity Equation

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  • Kim, Mina
  • Cho, Guedae
  • Koo, Won W.

Abstract

Using a dynamic gravity equation, we show that the national product differentiation model explains food and agricultural trade, while the product differentiation model explains large-scale manufacturing trade for both short- and long-run. We provide reasons of discrepancy from Head and Ries (2001) in the short-run, and illustrate the positive impacts of world income growth on bilateral trades.

Suggested Citation

  • Kim, Mina & Cho, Guedae & Koo, Won W., 2004. "The Pattern Of Bilateral Trade Using A Dynamic Gravity Equation," 2004 Annual meeting, August 1-4, Denver, CO 20248, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  • Handle: RePEc:ags:aaea04:20248
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    References listed on IDEAS

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    5. Feenstra, Robert & Markusen, James R. & Rose, Andrew K, 1998. "Understanding the Home Market Effect and the Gravity Equation: The Role of Differentiating Goods," CEPR Discussion Papers 2035, C.E.P.R. Discussion Papers.
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    7. Donald R. Davis & David E. Weinstein, 1998. "Market Access, Economic Geography, and Comparative Advantage: An Empirical Assessment," NBER Working Papers 6787, National Bureau of Economic Research, Inc.
    8. Keith Head & John Ries, 2001. "Increasing Returns versus National Product Differentiation as an Explanation for the Pattern of U.S.-Canada Trade," American Economic Review, American Economic Association, vol. 91(4), pages 858-876, September.
    9. Krugman, Paul, 1980. "Scale Economies, Product Differentiation, and the Pattern of Trade," American Economic Review, American Economic Association, vol. 70(5), pages 950-959, December.
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    12. Baier, Scott L. & Bergstrand, Jeffrey H., 2001. "The growth of world trade: tariffs, transport costs, and income similarity," Journal of International Economics, Elsevier, vol. 53(1), pages 1-27, February.
    13. Ahn, Seung C. & Schmidt, Peter, 1995. "Efficient estimation of models for dynamic panel data," Journal of Econometrics, Elsevier, vol. 68(1), pages 5-27, July.
    14. Nazrul Islam, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, Oxford University Press, vol. 110(4), pages 1127-1170.
    15. Anderson, T. W. & Hsiao, Cheng, 1982. "Formulation and estimation of dynamic models using panel data," Journal of Econometrics, Elsevier, vol. 18(1), pages 47-82, January.
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    Keywords

    International Relations/Trade;

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