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International trade without CES : estimating translog gravity
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Novy, Dennis. (2013) International trade without CES : estimating translog gravity. Journal of International Economics, 89 (2). pp. 271-282. ISSN 0022-1996
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Official URL: http://dx.doi.org/10.1016/j.jinteco.2012.08.010
Abstract
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 |
| Publisher: | Elsevier BV |
| ISSN: | 0022-1996 |
| Date: | March 2013 |
| Volume: | 89 |
| Number: | 2 |
| Page Range: | pp. 271-282 |
| Identification Number: | 10.1016/j.jinteco.2012.08.010 |
| Status: | Peer Reviewed |
| Publication Status: | Published |
| Access rights to Published version: | Restricted or Subscription Access |
| URI: | http://wrap.warwick.ac.uk/id/eprint/50192 |
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