2015
DOI: 10.1007/s00181-015-0954-7
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The determinants of trade costs: a random coefficient approach

Abstract: This paper assesses whether the sensitivity of bilateral trade volumes to various trade cost factors is constant or varies across countries. It utilizes a random coefficient model and analyzes a cross-sectional sample of bilateral trade data for 96 countries in 2005. We expect the elasticity of trade to vary particularly with bilateral distance and bilateral tariffs due to measurement error about these factors. Indeed, the variability of coefficients is significant for these trade cost measures. The results in… Show more

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Cited by 4 publications
(2 citation statements)
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“…In brief, the PPML estimator should not raise concerns about bias resulting from the presence of neither heteroscedasticity (Martin and Phamb 2020) nor measurement errors (Hou 2020). There are potentially more efficient estimators but these are either developed in the context of bilateral trade analyses (Egger and Pruša 2016), or they require the adoption of uncertain assumptions concerning the specific structure of the possible measurement errors (Manning and Mullahy 2001).…”
Section: Functional Form Reverse Causality and Measurement Errormentioning
confidence: 99%
“…In brief, the PPML estimator should not raise concerns about bias resulting from the presence of neither heteroscedasticity (Martin and Phamb 2020) nor measurement errors (Hou 2020). There are potentially more efficient estimators but these are either developed in the context of bilateral trade analyses (Egger and Pruša 2016), or they require the adoption of uncertain assumptions concerning the specific structure of the possible measurement errors (Manning and Mullahy 2001).…”
Section: Functional Form Reverse Causality and Measurement Errormentioning
confidence: 99%
“…More recently, Chen and Novy (2011) analysed trade costs between European countries , by distinguishing among various economic sectors, thereby contributing evidence regarding important factors such as distance, non-tariff measures, and initiatives of member countries. Miroudot et al (2012) applied the same methodology to trade in services and Egger and Pruša (2016), using a random coefficient model, assessed the sensitivity of bilateral trade volumes.…”
Section: Introductionmentioning
confidence: 99%