What Can We Learn from Bilateral Trade? Gravity and Beyond
Much empirical international trade reserach requires a careful analysis of bilateral trade patterns. In this paper we examine a commonly used technique called the gravity equation. Though the use of the gravity equation on aggregate data is well-grounded in monopolistic competition trade theory, we show that central predictions necessary for its derivation can be rejected with simple tests on disaggregated data.
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|Date of creation:||1997|
|Date of revision:|
|Contact details of provider:|| Postal: Purdue University, Center for International Business Education and Research, Krannert Graduate School of Management, 1310 Krannert Building West Lafayette, Indiana 47907-1310.|
Web page: http://www.krannert.purdue.edu/
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