Gravity redux: measuring international trade costs with panel data
Novy, Dennis (2009) Gravity redux: measuring international trade costs with panel data. Working Paper. Coventry: University of Warwick, Department of Economics. Warwick economic research papers (No.861).
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Barriers to international trade are known to be large. But have they become smaller over time? Building on the gravity framework by Anderson and van Wincoop (2003), I derive an analytical solution for time-varying multilateral resistance variables that can be related to observable trade data. This solution makes it possible to infer time-varying bilateral trade costs directly from the model.s gravity equation without imposing arbitrary trade cost functions. As an illustration, I show that U.S. trade costs with major trading partners declined on average by about 40 percent between 1970 and 2000, with Mexico and Canada experiencing the biggest reductions.
|Item Type:||Working or Discussion Paper (Working Paper)|
|Subjects:||H Social Sciences > HF Commerce|
|Divisions:||Faculty of Social Sciences > Economics|
|Library of Congress Subject Headings (LCSH):||International trade, Panel analysis, Costs, Industrial, United States -- Foreign economic relations -- Mexico, Mexico -- Foreign economic relations -- United States|
|Series Name:||Warwick economic research papers|
|Publisher:||University of Warwick, Department of Economics|
|Place of Publication:||Coventry|
|Official Date:||July 2009|
|Number of Pages:||27|
|Status:||Not Peer Reviewed|
|Access rights to Published version:||Open Access|
Originally published November 2008, this version updated July 2009.
|Funder:||Economic and Social Research Council (Great Britain) (ESRC)|
|Grant number:||RES-000-22-3112 (ESRC)|
Anderson, J., 1979. A Theoretical Foundation for the Gravity Equation. American Economic
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