Distance and Border Effects in International Trade: A Comparison of Estimation Methods

Magerman, Glenn; Studnicka, Zuzanna; Hove, Jan Van

doi:10.5018/economics-ejournal.ja.2016-18

Cited by 20 publications

(17 citation statements)

References 52 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…And in their services trade handbook, Sauve and Roy () explain that ‘[u]nfortunately, PPML estimation with several high‐dimensional fixed effects led to non‐convergence […] even with the application of different work‐around strategies suggested in the recent literature’. Dutt, Santacreu and Traca (), Kareem () and Magerman, Studnicka and Van Hove () share similar frustrations.…”

mentioning

confidence: 95%

Currency Unions and Trade: A PPML Re‐assessment with High‐dimensional Fixed Effects

et al. 2018

View full text Add to dashboard Cite

Recent work on the effects of currency unions (CUs) on trade stresses the importance of using many countries and years in order to obtain reliable estimates. However, for large samples, computational issues associated with the three-way (exporter-time, importertime, and country pair) fixed effects currently recommended in the gravity literature have heretofore limited the choice of estimator, leaving an important methodological gap. To address this gap, we introduce an iterative poisson pseudo-maximum likelihood (PPML) estimation procedure that facilitates the inclusion of these fixed effects for large data sets and also allows for correlated errors across countries and time. When applied to a comprehensive sample with more than 200 countries trading over 65 years, these innovations flip the conclusions of an otherwise rigorously specified linear model. Most importantly, our estimates for both the overall CU effect and the Euro effect specifically are economically small and statistically insignificant. We also document that linear and PPML estimates of the Euro effect increasingly diverge as the sample size grows. JEL Classification numbers: C13; C23; C55; F14; F15; F33. specifically investigate the effect of the EMU. Santos Silva and Tenreyro (2010a) and Rose (2017) survey each of these literatures.2 Of course, endogeneity of common currencies may also arise from time-varying bilateral effects. Our investigation does not tackle these sources of selection into currency unions. 3 Glick (2017) demonstrates that these results are robust to controlling for EU membership and further shows that there is heterogeneity in the trade effects between new and old EMU members. 4 Glick and Rose (2016) include these results in an earlier working paper available online (Glick and Rose, 2015).They still estimate a generally positive 'additional effect' for the EMU vs. other CUs, but find the overall CU effect disappears over time, echoing an earlier finding by de Sousa (2012).

show abstract

mentioning

confidence: 95%

Currency Unions and Trade: A PPML Re‐assessment with High‐dimensional Fixed Effects

et al. 2018

View full text Add to dashboard Cite

show abstract

“…In addition, the Poisson pseudo-ML (PPML) estimator as proposed by Silva and Tenreyro (2006) is applied to conduct a robustness check for empirical estimations. If nonlinear least squares and optimize sums of squared residuals are assumed, the estimator of the model becomes as follows (Magerman et al 2016):…”

Section: Data and Research Methodologymentioning

confidence: 99%

Energy Trade and Economic Integration between the Commonwealth Independent States and China

Rasoulinezhad

2020

Journal of Economic Integration

View full text Add to dashboard Cite

The main purpose of this study is to conduct the traditional economic, political, and geopolitical factors to uncover the relationship between different factors and the volume of China's energy importing from the Commonwealth of Independent States. We conducted a panel data framework for our sample during the period between 2001 and 2017. My paper's main findings reveal that the economic sizes of Commonwealth of Independent States members have a positive effect on China's energy import flow from the Commonwealth of Independent States. Furthermore, the amount of the Commonwealth of Independent States 's annual energy exports to countries other than China has a significant negative effect on the level of China's energy imports from the Commonwealth of Independent States. In regard to geographic distance, findings showed a negative sign of its coefficient meaning that geographical distance might decelerate energy trade flows running from the Commonwealth of Independent States to China. I also discovered that China's foreign direct investment in Commonwealth of Independent States states might determine and accelerate energy export flows running from the Commonwealth of Independent States to China. Finally, our major findings proved the evidence of a positive relationship between political risk in the Commonwealth of Independent States and the energy importing flows of China.

show abstract

“…Since the seminal publications of McCallum (1995) and Helliwell (1997), the economists have wondered how borders could generate a home bias in consumption. The 'border effect' has thus been one of the most discussed topics for investigations (Carter and Goemans, 2018;Feenstra, 2002;Magerman, Studnicka, and Van Hove, 2016). There are a great deal of analyses and works centering on the question of border effects that are familiar in the literature as the 'McCullum Border Puzzle.'…”

Section: -2003: the Theoretical Foundations Of The Gravity Modelmentioning

confidence: 99%

The gravity model of trade

Shahriar

Kea

et al. 2019

RIC

View full text Add to dashboard Cite

Purpose. The purpose of this study is to trace the theoretical developments of the gravity model of trade. The key question is: what are the dominant features of the development of the gravity trade model? Methodology. This research is conducted by employing a number of methods that include the historical, descriptive and analytical methods. The main contribution of this paper is to trace the historical and theoretical development phases of the gravity model. Findings. This study is a novel attempt in terms of the identification of the four distinctive phases of the development of the gravity model. This work would, therefore, expand the existing literature on the gravity model. We argue that the development of the gravity model is the outcome of many research efforts. A large body of literature has given the model a solid theoretical foundation. But there is no consensus about the proper econometric estimation methods of the model. The gravity model is significant both historically and analytically. It is a useful tool for the analysis of international trade. It has become a popular research device used by the researchers and policy makers around the world. The gravity is regarded as one of the most successful models in the literature of international economics. Originality. The original contributions of this paper lie in streamlining the consistent historical development of the gravity model over a longer period of time-frame, ranging from 1885 to 2018. Limitations and Implications. This work is theoretical aspects of the trade gravity model. Future researchers could overcome the limitations by combining the theoretical and empirical studies in a paper. This paper can help the future researchers in dealing with the broad body of literature of gravity model. Acknowledement. This study was supported by the National Natural Science Foundation of China (grants No.71673223 & 71473197), and a PhD scholarship from the China Scholarship Council (CSC). The first author would like to thank the CSC for the financial support. He also acknowledges the invaluable research advice and guidance received from Dr. Yoto V. Yotov, professor at the School of Economics of the Lebow College of Business at Drexel University, Philadelphia, USA. The authors are highly grateful to the anonymous reviewers, managing editor, and the editor-in chief for their kind help and critical comments on the earlier drafts of the paper. However, the authors are responsible for the contents and limitations of the study. They declared no conflict of interests.

show abstract

Distance and Border Effects in International Trade: A Comparison of Estimation Methods

Cited by 20 publications

References 52 publications

Currency Unions and Trade: A PPML Re‐assessment with High‐dimensional Fixed Effects

Currency Unions and Trade: A PPML Re‐assessment with High‐dimensional Fixed Effects

Energy Trade and Economic Integration between the Commonwealth Independent States and China

The gravity model of trade

Contact Info

Product

Resources

About