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Comparing estimation methods of trade costs

Authors: Knuchel, Michael;

Comparing estimation methods of trade costs

Abstract

Gravity models are used to understand intra- and international trade flows. Trade costs play a central role in these models, but are not clearly observable. In order to infer these costs, different estimation methods exist. The aim of this paper is to investigate these methods on systematic patterns in their predicted trade costs. By applying the methods to one dataset, the resulting trade cost estimates become comparable. For a given trade elasticity, the inverse gravity framework from Novy (2013a) is found to predict lower values than ratio gravity, used for example by Simonovska and Vaugh (2014). However, when moderating the impact of outliers, inverse gravity produces lower estimates.

Keywords

trade policy, ddc:330, F14, F16, gravity models, trade costs, F10

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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
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