The distance effects on the intensive and extensive margins of trade over time

Juyoung Cheong (), Do Won Kwak () and Kam Ki Tang

Empirical Economics, 2016, vol. 50, issue 2, No 2, 253-278

Abstract: Abstract The empirical trade literature has long been puzzled by the finding of large and non-decreasing distance coefficients in the gravity equation amid falling transportation costs over time. To shed new light on this puzzle, the recent theoretical literature shifts its focus to the differential effects of distance on the extensive and intensive margins of trade. However, so far there is a lack of corresponding contributions from empirical studies of the gravity equation. This paper provides the first piece of evidence using data for about 150–200 countries between the years 1980 and 2009. The extensive and intensive margins are measured based on bilateral trade data of more than 3,100 product items. It is found that the distance effect on the extensive margin declines, while that on the intensive margin rises over time for most specifications. Therefore, there is little empirical evidence that distinguishing between the extensive and intensive margins of trade solves the distance puzzle.

Keywords: Extensive margin; Intensive margin; Distance effect; Gravity model (search for similar items in EconPapers)
JEL-codes: F14 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://link.springer.com/10.1007/s00181-015-0927-x Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
Working Paper: The Distance Effects on the Intensive and Extensive Margins of Trade Over Time (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:empeco:v:50:y:2016:i:2:d:10.1007_s00181-015-0927-x

Ordering information: This journal article can be ordered from
http://www.springer. ... rics/journal/181/PS2

DOI: 10.1007/s00181-015-0927-x

Access Statistics for this article

Empirical Economics is currently edited by Robert M. Kunst, Arthur H.O. van Soest, Bertrand Candelon, Subal C. Kumbhakar and Joakim Westerlund

More articles in Empirical Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().