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|
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Web page: http://www.krannert.purdue.edu/
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