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Comparing alternative methods to estimate gravity models of bilateral trade

  • Estrella Gómez Herrera

    ()

    (Department of Economic Theory and Economic History, University of Granada.)

The gravity equation has been traditionally used to predict trade flows across countries. However, several problems related with its empirical application still remain unsolved. In this paper, I provide a survey of the recent literature concerning the specification and estimation methods of this equation. In addition, I compare the performance of two widely extended estimators, panel OLS and Poisson Pseudo Maximum Likelihood (PPML), for a dataset covering 80% of world trade.

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File URL: http://www.ugr.es/~teoriahe/RePEc/gra/wpaper/thepapers10_05.pdf
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Paper provided by Department of Economic Theory and Economic History of the University of Granada. in its series ThE Papers with number 10/05.

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Length: 29 pages
Date of creation: 01 Sep 2010
Date of revision:
Handle: RePEc:gra:wpaper:10/05
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