The Distance Effects on the Intensive and Extensive Margins of Trade Over Time
The empirical trade literature has long been puzzled by the finding of a large and non-decreasing distance coefficient in the gravity equation amid falling transportation costs over time. To shed new light on this puzzle, the recent theoretical literature shifts its focus to the differential effects of distance on the extensive and intensive margins of trade. However, so far there is a lack of corresponding contributions from studies of empirical gravity equations. This paper provides the first evidence using data for about 150-200 countries between the years 1980 and 2009. Extensive and intensive margins are measured based on bilateral trade data of more than 3100 product items. It is found that the distance effect on the extensive margins declines while that on the intensive margins rises over time. The same conclusion is reached when the distance effects are allowed to be sector-specific.
|Date of creation:||16 Oct 2013|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +61 7 3365 6570
Fax: +61 7 3365 7299
Web page: http://www.uq.edu.au/economics/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- David Hummels, 2007. "Transportation Costs and International Trade in the Second Era of Globalization," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 131-154, Summer.
- James E. Anderson & Eric van Wincoop, 2003.
"Gravity with Gravitas: A Solution to the Border Puzzle,"
American Economic Review,
American Economic Association, vol. 93(1), pages 170-192, March.
- James E. Anderson & Eric van Wincoop, 2001. "Gravity with Gravitas: A Solution to the Border Puzzle," NBER Working Papers 8079, National Bureau of Economic Research, Inc.
- James E. Anderson & Eric van Wincoop, 2000. "Gravity with Gravitas: A Solution to the Border Puzzle," Boston College Working Papers in Economics 485, Boston College Department of Economics.
- Anne-Célia Disdier & Keith Head, 2008.
"The Puzzling Persistence of the Distance Effect on Bilateral Trade,"
The Review of Economics and Statistics,
MIT Press, vol. 90(1), pages 37-48, February.
- Anne-Célia Disdier & Keith Head, 2004. "The Puzzling Persistence of the Distance Effect on Bilateral Trade," Development Working Papers 186, Centro Studi Luca d\'Agliano, University of Milano.
- Yotov, Yoto, 2012.
"A Simple Solution to the Distance Puzzle in International Trade,"
School of Economics Working Paper Series
2012-6, LeBow College of Business, Drexel University.
- Yotov, Yoto V., 2012. "A simple solution to the distance puzzle in international trade," Economics Letters, Elsevier, vol. 117(3), pages 794-798.
- Carrere, Celine & Schiff, Maurice, 2004.
"On the geography of trade : distance is alive and well,"
Policy Research Working Paper Series
3206, The World Bank.
- Céline Carrère & Maurice Schiff, 2005. "On the Geography of Trade. Distance is Alive and Well," Revue économique, Presses de Sciences-Po, vol. 56(6), pages 1249-1274.
- Céline CARRERE & Maurice SCHIFF, 2004. "On the Geography of Trade: Distance is Alive and Well," Working Papers 200423, CERDI.
- Lin, Faqin & Sim, Nicholas C.S., 2012. "Death of distance and the distance puzzle," Economics Letters, Elsevier, vol. 116(2), pages 225-228.
- David Hummels & Peter J. Klenow, 2005. "The Variety and Quality of a Nation's Exports," American Economic Review, American Economic Association, vol. 95(3), pages 704-723, June.
- Krautheim, Sebastian, 2012. "Heterogeneous firms, exporter networks and the effect of distance on international trade," Journal of International Economics, Elsevier, vol. 87(1), pages 27-35.
When requesting a correction, please mention this item's handle: RePEc:qld:uq2004:488. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (SOE IT)
If references are entirely missing, you can add them using this form.