Multi-way clustering estimation of standard errors in gravity models

Peter Egger and Filip Tarlea

Economics Letters, 2015, vol. 134, issue C, 144-147

Abstract: This paper analyzes the consequences of ignoring the multi-indexed structure with cross-sectional and panel-data gravity models of bilateral trade for inference. We estimate log-linear and generalized-linear gravity equations of bilateral trade. Ignoring multi-way clustering in the data at hand leads to misleading inference regarding the relevance of preferential trade-agreement memberships of different kinds.

Keywords: Preferential economic integration agreements; Standard errors; Confidence interval; Gravity; GLM (search for similar items in EconPapers)
JEL-codes: C12 C13 C23 F12 F14 F15 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (98)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:134:y:2015:i:c:p:144-147

DOI: 10.1016/j.econlet.2015.06.023

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