publication . Other literature type . Preprint . 2015 . Embargo end date: 02 Jun 2015

Bilateral export trade and income similarity: Does the Linder hypothesis hold for agricultural and food trade?

Steinbach, Sandro;
Open Access English
  • Published: 01 May 2015
  • Publisher: CentMa, Intern Center for Management, Communication, and Research
In this paper we investigate the Linder hypothesis for bilateral export trade in agricultural and food products by utilizing the sectoral gravity equation derived in Hallak (2010). Based on a sample of 152 countries, we study the relationship for 737 agricultural and food products at the 6-digit HS code level, using trade data for 1995-2012. We estimate the gravity equation year by and year and sector by sector, analyzing the estimates of Linder's term for two specifications of the similarity index. We compare a theoretically justified definition of the index with an adjusted definition that takes into account relative prices. We show that similar demand structu...
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free text keywords: Product quality, Linder effect, sectoral gravity model, Agribusiness,
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