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Even Count Estimation

Author

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  • Laszlo Balazsi
  • Felix Chan
  • Laszlo Matyas

Abstract

This paper proposes a new estimation procedure called Event Count Estimator (ECE). The estimator is straightforward to implement and it is robust against outliers, censoring and excess zeros in the data. The paper establishes asymptotic properties of the new estimator and the theoretical results are supported by several Monte Carlo experiments. These also show that the estimator has reasonable properties in moderate to large samples. As such, the cost of inefficiency for robustness is negligible from an applied viewpoint. The practical usefulness of the new estimator is demonstrated via an empirical application of the Gravity Model of trade.

Suggested Citation

  • Laszlo Balazsi & Felix Chan & Laszlo Matyas, 2018. "Even Count Estimation," CEU Working Papers 2018_2, Department of Economics, Central European University.
  • Handle: RePEc:ceu:econwp:2018_2
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    References listed on IDEAS

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    1. Eichengreen, Barry & Irwin, Douglas A., 1995. "Trade blocs, currency blocs and the reorientation of world trade in the 1930s," Journal of International Economics, Elsevier, vol. 38(1-2), pages 1-24, February.
    2. Andrew K. Rose, 2004. "Do We Really Know That the WTO Increases Trade?," American Economic Review, American Economic Association, vol. 94(1), pages 98-114, March.
    3. Laszlo Matyas, 1997. "Proper Econometric Specification of the Gravity Model," The World Economy, Wiley Blackwell, vol. 20(3), pages 363-368, May.
    4. Jeffrey A. Frankel, 1997. "Regional Trading Blocs in the World Economic System," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 72, October.
    5. Brada, Josef C & Mendez, Jose A, 1985. "Economic Integration among Developed, Developing and Centrally Planned Economies: A Comparative Analysis," The Review of Economics and Statistics, MIT Press, vol. 67(4), pages 549-556, November.
    6. Bikker, Jacob A, 1987. "An International Trade Flow Model with Substitution: An Extension of the Gravity Model," Kyklos, Wiley Blackwell, vol. 40(3), pages 315-337.
    7. Wang, Zhen Kun & Winters, L. Alan, 1991. "The Trading Potential of Eastern Europe," CEPR Discussion Papers 610, C.E.P.R. Discussion Papers.
    8. Konya, Laszlo & Matyas, Laszlo & Harris, Mark, 2011. "GATT/WTO membership does promote international trade after all – Some new empirical evidence," MPRA Paper 34978, University Library of Munich, Germany, revised 20 Nov 2011.
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