Vertical gravity

Douglas H. Brooks and Benno Ferrarini

Journal of Asian Economics, 2014, vol. 31-32, 1-9

Abstract: Vertical gravity deploys as the dependent variable a newly developed indicator of production sharing and processing trade among country pairs. The intensity of this relationship among 73 countries between 1998 and 2005 is assessed in a standard fixed-effects panel setting, with particular focus on trade policy. We find that joint adherence to a preferential trade agreement is associated with a considerably higher degree of processing trade among country pairs, and that such trade is also premised on a lower tariff environment compared to countries that integrate less strongly.

Keywords: Global value chains; Vertical trade; Gravity analysis; Factory Asia (search for similar items in EconPapers)
JEL-codes: C82 F15 F23 (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:eee:asieco:v:31-32:y:2014:i::p:1-9

DOI: 10.1016/j.asieco.2014.02.002

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