IDEAS home Printed from https://ideas.repec.org/p/ags/iat12m/142765.html

Structural Gravity Estimation & Agriculture

Author

Listed:
  • Prehn, Soren
  • Brümmer, Bernhard
  • Glauben, Thomas

Abstract

Recently, discussion about the appropriate estimation of gravity trade models has started in agriculture. Here, we are going to review recent developments in the literature. It appears that fixed effects Poisson Pseudo Maximum Likelihood is not only the only consistent estimator [Santos Silva and Tenreyro, 2006] but also it already allows for a structural fit [Fally, 2012]. Fixed effects in conjunction with the adding-up property of Poisson Pseudo Maximum Likelihood - which has been so far neglected - can be harnessed to directly deduce multilateral resistance indexes (i.e. general equilibrium effects) from reduced-form estimation. This innovation made by Fally will ease comparative statics and incidence analysis, making Poisson Pseudo Maximum Likelihood even more preferable in practice.

Suggested Citation

  • Prehn, Soren & Brümmer, Bernhard & Glauben, Thomas, 2012. "Structural Gravity Estimation & Agriculture," 2012: New Rules of Trade? December 2012, San Diego, California 142765, International Agricultural Trade Research Consortium.
    • Handle: RePEc:ags:iat12m:142765
    DOI: 10.22004/ag.econ.142765
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/142765/files/Sess3_Prehn_paper_12-2012.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.142765?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Bahrs, Enno & Held, Jobst-Henrik & Thiering, Jochen, 2007. "Auswirkungen der Bioenergieproduktion auf die Agrarpolitik sowie auf Anreizstrukturen in der Landwirtschaft: eine partielle Analyse bedeutender Fragestellungen anhand der Beispielregion Niedersachsen," DARE Discussion Papers 0705, Georg-August University of Göttingen, Department of Agricultural Economics and Rural Development (DARE).
    2. Martijn Burger & Frank van Oort & Gert-Jan Linders, 2009. "On the Specification of the Gravity Model of Trade: Zeros, Excess Zeros and Zero-inflated Estimation," Spatial Economic Analysis, Taylor & Francis Journals, vol. 4(2), pages 167-190.
    3. Prehn, Sören & Brümmer, Bernhard, 2011. "Estimation issues in disaggregate gravity trade models," DARE Discussion Papers 1107, Georg-August University of Göttingen, Department of Agricultural Economics and Rural Development (DARE).
    4. 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.
    5. James E. Anderson & Yoto V. Yotov, 2012. "Gold Standard Gravity," Boston College Working Papers in Economics 795, Boston College Department of Economics.
    6. Bahlmann, Jan & Spiller, Achim & Plumeyer, Cord-Herwig, 2009. "Status quo und Akzeptanz von Internet-basierten Informationssystemen: Ergebnisse einer empirischen Analyse in der deutschen Veredelungswirtschaft," DARE Discussion Papers 0901, Georg-August University of Göttingen, Department of Agricultural Economics and Rural Development (DARE).
    7. Peter H. Egger & Mario Larch, 2012. "Estimating Consistent Border Effects in Gravity Models with Multilateral Resistance," The World Economy, Wiley Blackwell, vol. 35(9), pages 1121-1125, September.
    8. Kevin E. Staub & Rainer Winkelmann, 2013. "Consistent Estimation Of Zero‐Inflated Count Models," Health Economics, John Wiley & Sons, Ltd., vol. 22(6), pages 673-686, June.
    9. Zahoor Ul Haq & Karl Meilke & John Cranfield, 2013. "Selection bias in a gravity model of agrifood trade," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 40(2), pages 331-360, March.
    10. Philippidis, George & Resano-Ezcaray, Helena & Sanjuan-Lopez, Ana Isabel, 2011. "Capturing zero trade values in gravity equations of trade: A disaggregated sectoral analysis," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114760, European Association of Agricultural Economists.
    11. J. M. C. Santos Silva & Silvana Tenreyro, 2006. "The Log of Gravity," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 641-658, November.
    12. Clément Bosquet & Hervé Boulhol, 2014. "Applying the GLM Variance Assumption to Overcome the Scale-Dependence of the Negative Binomial QGPML Estimator," Econometric Reviews, Taylor & Francis Journals, vol. 33(7), pages 772-784, October.
    13. Santos Silva, J.M.C. & Tenreyro, Silvana, 2011. "Further simulation evidence on the performance of the Poisson pseudo-maximum likelihood estimator," Economics Letters, Elsevier, vol. 112(2), pages 220-222, August.
    14. Busse, Stefan & Brümmer, Bernard & Ihle, Rico, 2010. "Interdependencies between fossil fuel and renewable energy markets: the German biodiesel market," DARE Discussion Papers 1010, Georg-August University of Göttingen, Department of Agricultural Economics and Rural Development (DARE).
    15. James E. Anderson & Yoto V. Yotov, 2010. "The Changing Incidence of Geography," American Economic Review, American Economic Association, vol. 100(5), pages 2157-2186, December.
    16. James Anderson & Catherine Milot & Yoto Yotov, 2012. "How Much Does Geography Deflect Services Trade?," School of Economics Working Paper Series 2012-5, LeBow College of Business, Drexel University.
    17. Gille, Claudia & Spiller, Achim, 2008. "Kundenzufriedenheit in der Pensionspferdehaltung: eine empirische Studie," DARE Discussion Papers 0803, Georg-August University of Göttingen, Department of Agricultural Economics and Rural Development (DARE).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Thomas Kopp & Sören Prehn & Bernhard Brümmer, 2016. "Preference Erosion – The Case of Everything But Arms and Sugar," The World Economy, Wiley Blackwell, vol. 39(9), pages 1339-1359, September.
    2. Cipollina, Maria & Laborde, David & Salvatici, Luca, 2013. "Do Preferential Trade Policies (Actually) Increase Exports? An analysis of EU trade policies," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150177, Agricultural and Applied Economics Association.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Carlos Llano-Verduras & Santiago Pérez-Balsalobre & Ana Rincón-Aznar, 2021. "Market fragmentation and the rise of sub-national regulation," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 67(3), pages 765-797, December.
    2. Fally, Thibault, 2015. "Structural gravity and fixed effects," Journal of International Economics, Elsevier, vol. 97(1), pages 76-85.
    3. Kareem, Fatima Olanike & Martinez-Zarzoso, Inmaculada & Brümmer, Bernhard, 2016. "Fitting the Gravity Model when Zero Trade Flows are Frequent: a Comparison of Estimation Techniques using Africa's Trade Data," GlobalFood Discussion Papers 230588, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    4. Head, Keith & Mayer, Thierry, 2014. "Gravity Equations: Workhorse,Toolkit, and Cookbook," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 131-195, Elsevier.
    5. Peter Egger & Kevin Staub, 2016. "GLM estimation of trade gravity models with fixed effects," Empirical Economics, Springer, vol. 50(1), pages 137-175, February.
    6. Prehn, Sören & Brümmer, Bernhard, 2011. "Estimation issues in disaggregate gravity trade models," DARE Discussion Papers 1107, Georg-August University of Göttingen, Department of Agricultural Economics and Rural Development (DARE).
    7. Pascal L. Ghazalian, 2015. "The New Tomato Suspension Agreement: What Are the Implications for Trade Flows?," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 63(3), pages 359-380, September.
    8. Hirsch, Cornelius & Krisztin, Tamás & See, Linda, 2020. "Water Resources as Determinants for Foreign Direct Investments in Land - A Gravity Analysis of Foreign Land Acquisitions," Ecological Economics, Elsevier, vol. 170(C).
    9. Pascal L. Ghazalian, 2019. "Canada's beef exports: Border effects and prospects for market access," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 67(1), pages 53-74, March.
    10. Zongo, Amara, 2020. "The Impact of Restrictive Measures on Bilateral FDI in OECD Countries," MPRA Paper 101929, University Library of Munich, Germany.
    11. William Martin & Cong S. Pham, 2020. "Estimating the gravity model when zero trade flows are frequent and economically determined," Applied Economics, Taylor & Francis Journals, vol. 52(26), pages 2766-2779, May.
    12. Pascal L. Ghazalian, 2015. "On the Magnitude of the Geographic Distance Effect on Primary Agricultural and Processed Food Trade," Agribusiness, John Wiley & Sons, Ltd., vol. 31(2), pages 148-170, April.
    13. Maria Cipollina & David Laborde Debucquet & Luca Salvatici, 2017. "The tide that does not raise all boats: an assessment of EU preferential trade policies," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 153(1), pages 199-231, February.
    14. Marie M Stack & Rob Ackrill & Martin Bliss, 2019. "Sugar trade and the role of historical colonial linkages," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 46(1), pages 79-108.
    15. Adrián Rabadán & Ángela Triguero, 2021. "Influence of food safety standards on trade: Evidence from the pistachio sector," Agribusiness, John Wiley & Sons, Ltd., vol. 37(3), pages 489-514, July.
    16. Esposito, Piero, 2017. "Trade creation, trade diversion and imbalances in the EMU," Economic Modelling, Elsevier, vol. 60(C), pages 462-472.
    17. Prehn, Sören & Brümmer, Bernhard & Glauben, Thomas, 2012. "An extended Viner Model: Trade creation, diversion & reduction," DARE Discussion Papers 1210, Georg-August University of Göttingen, Department of Agricultural Economics and Rural Development (DARE).
    18. Egger, Peter & Larch, Mario & Staub, Kevin E, 2012. "Trade Preferences and Bilateral Trade in Goods and Services: A Structural Approach," CEPR Discussion Papers 9051, C.E.P.R. Discussion Papers.
    19. Aiello, Francesco & Demaria, Federica, 2009. "Do trade preferential agreements enhance the exports of developing countries? Evidence from the EU GSP," MPRA Paper 20093, University Library of Munich, Germany.
    20. Xavier Cirera & Francesca Foliano & Michael Gasiorek, 2016. "The impact of preferences on developing countries’ exports to the European Union: bilateral gravity modelling at the product level," Empirical Economics, Springer, vol. 50(1), pages 59-102, February.

    More about this item

    Keywords

    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:iat12m:142765. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/iatrcea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.