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Do Borders Really Slash Trade? A Meta-Analysis

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  • Tomas Havranek

    () (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nabrezi 6, 111 01 Prague 1, Czech Republic
    Czech National Bank)

  • Zuzana Irsova

    () (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nabrezi 6, 111 01 Prague 1, Czech Republic)

Abstract

National borders reduce trade, but most estimates of the border effect seem puzzlingly large. We show that major methodological innovations of the last decade combine to shrink the border effect to a one-third reduction in international trade flows worldwide. The bor- der effect varies across regions: it is substantial in emerging countries, but relatively small in OECD countries. For the computation we collect 1,271 estimates of the border effect reported in 61 studies, codify 32 aspects of study design that may influence the estimates, and use Bayesian model averaging to take into account model uncertainty in meta-analysis. Our results suggest that methods systematically affect the estimated border effects. Espe- cially important is the level of aggregation, measurement of internal and external distance, control for multilateral resistance, and treatment of zero trade flows. We find no evidence of publication bias.

Suggested Citation

  • Tomas Havranek & Zuzana Irsova, 2015. "Do Borders Really Slash Trade? A Meta-Analysis," Working Papers IES 2015/03, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Feb 2015.
  • Handle: RePEc:fau:wpaper:wp2015_03
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    Cited by:

    1. repec:eee:eecrev:v:95:y:2017:i:c:p:142-167 is not listed on IDEAS
    2. Dominika Reckova & Zuzana Irsova, 2015. "Publication Bias in Measuring Anthropogenic Climate Change," Energy & Environment, , vol. 26(5), pages 853-862, September.
    3. Havranek, Tomas & Horvath, Roman & Zeynalov, Ayaz, 2016. "Natural Resources and Economic Growth: A Meta-Analysis," World Development, Elsevier, vol. 88(C), pages 134-151.
    4. Iwasaki, Ichiro & Kočenda, Evžen, 2017. "Are some owners better than others in Czech privatized firms? Even meta-analysis can’t make us perfectly sure," Economic Systems, Elsevier, vol. 41(4), pages 537-568.
    5. Anton Astakhov & Tomas Havranek & Jiri Novak, 2017. "Firm Size and Stock Returns: A Meta-Analysis," Working Papers IES 2017/14, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Jul 2017.
    6. repec:cnb:ocpubv:rb15/2 is not listed on IDEAS
    7. Nguyen Van, Phuong, 2014. "Sources of exchange rate fluctuation in Vietnam: an application of the SVAR model," MPRA Paper 60565, University Library of Munich, Germany.
    8. repec:uwp:landec:v:94:y:2018:i:2:p:259-283 is not listed on IDEAS
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    10. Diana Zigraiova & Tomas Havranek, 2016. "Bank Competition And Financial Stability: Much Ado About Nothing?," Journal of Economic Surveys, Wiley Blackwell, vol. 30(5), pages 944-981, December.
    11. Havranek, Tomas & Rusnak, Marek & Sokolova, Anna, 2017. "Habit formation in consumption: A meta-analysis," European Economic Review, Elsevier, vol. 95(C), pages 142-167.
    12. Gunby, Philip & Jin, Yinghua & Robert Reed, W., 2017. "Did FDI Really Cause Chinese Economic Growth? A Meta-Analysis," World Development, Elsevier, vol. 90(C), pages 242-255.
    13. repec:wly:econjl:v:127:y:2017:i:605:p:f236-f265 is not listed on IDEAS
    14. Reed, W. Robert, 2015. "A Monte Carlo analysis of alternative meta-analysis estimators in the presence of publication bias," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 9, pages 1-40.
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    17. Tomas Havranek & Zuzana Irsova & Tomas Vlach, 2018. "Measuring the Income Elasticity of Water Demand: The Importance of Publication and Endogeneity Biases," Land Economics, University of Wisconsin Press, vol. 94(2), pages 259-283.
    18. repec:cnb:ocpubv:rb15/1 is not listed on IDEAS
    19. Christian K. Darko & Giovanni Occhiali & Enrico Vanino, 2018. "The Chinese are Here: Firm Level Analysis of Import Competition and Performance in Sub-Saharan Africa," Working Papers 2018.14, Fondazione Eni Enrico Mattei.
    20. Miroslav Plasil & Jakub Seidler & Petr Hlavac & Volha Audzei & Jakub Mateju & Michal Kejak & Simona Malovana & Jan Frait, 2016. "Financial Cycles and Macroprudential and Monetary Policies," Occasional Publications - Edited Volumes, Czech National Bank, Research Department, edition 2, volume 14, number rb14/2 edited by Jan Babecky & Michal Hlavacek.
    21. Dominika Reckova & Zuzana Irsova, 2015. "Publication Bias in Measuring Climate Sensitivity," Working Papers IES 2015/14, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised May 2015.

    More about this item

    Keywords

    Bayesian model averaging; bilateral trade; borders; gravity; meta- analysis; publication selection bias;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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