Gold Standard Gravity
This paper provides striking confirmation of the restrictions of the structural gravity model of trade. Structural forces predicted by theory explain 95% of the variation of the fixed effects used to control for them in the recent gravity literature, fixed effects that in principle could reflect other forces. This validation opens avenues to inferring unobserved sectoral activity and multilateral resistance variables by equating fixed effects with structural gravity counterparts. Our findings also provide important validation of a host of general equilibrium comparative static exercises based on the structural gravity model.
|Date of creation:||30 Jan 2012|
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- James E Anderson, James E; Yotov, Yoto V., 2010.
"Specialisation: Pro and Anti-Globalizing 1990-2002,"
CAGE Online Working Paper Series
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- Thierry Mayer & Soledad Zignago, 2011.
"Notes on CEPII’s distances measures: The GeoDist database,"
2011-25, CEPII research center.
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NBER Working Papers
12927, National Bureau of Economic Research, Inc.
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- James E. Anderson, 2011.
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- Mayer, Thierry & Paillacar, Rodrigo & Zignago, Soledad, 2008. "TradeProd. The CEPII Trade, Production and Bilateral Protection Database: Explanatory Notes," MPRA Paper 26477, University Library of Munich, Germany.
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