International trade without CES : estimating translog gravity
Novy, Dennis. (2013) International trade without CES : estimating translog gravity. Journal of International Economics, 89 (2). pp. 271-282. ISSN 0022-1996Full text not available from this repository.
Official URL: http://dx.doi.org/10.1016/j.jinteco.2012.08.010
This paper derives a micro-founded gravity equation based on a translog demand system that allows for flexible substitution patterns across goods. In contrast to the standard CES-based gravity equation, translog gravity generates an endogenous trade cost elasticity. Trade is more sensitive to trade costs if the exporting country only provides a small share of the destination country's imports. As a result, trade costs have a heterogeneous impact across country pairs, with some trade flows predicted to be zero. I test the translog gravity equation and find empirical evidence that is in many ways consistent with its predictions. © 2012 Elsevier B.V. All rights reserved.
|Item Type:||Journal Article|
|Divisions:||Faculty of Social Sciences > Economics|
|Journal or Publication Title:||Journal of International Economics|
|Page Range:||pp. 271-282|
|Access rights to Published version:||Restricted or Subscription Access|
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