EconPapers    
Economics at your fingertips  
 

How serious is the omission of bilateral tariff rates in gravity?

Kazunobu Hayakawa ()

Journal of the Japanese and International Economies, 2013, vol. 27, issue C, 81-94

Abstract: This paper presents a constructed dataset of worldwide bilateral tariff rates to explore the seriousness of omitting bilateral tariff rates from gravity equations. Results indicate, first, that omitting bilateral tariff rates presents no serious issue related to the omitted variable bias because coefficients for the usual gravity variables remain unchanged before and after their inclusion. Second, the widely used dummy variable for regional trade agreements is not a statistical substitute for tariff rates because the coefficient for bilateral tariff rates remains significant even if it is included. Similarly, time-invariant pair fixed effects alongside time-variant importer and exporter fixed effects do not substitute statistically for omitted tariff rates.

Keywords: Gravity equation; Tariff rates; Free trade agreement (search for similar items in EconPapers)
JEL-codes: F10 F15 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0889158313000038
Full text for ScienceDirect subscribers only

Related works:
Working Paper: How serious is the omission of bilateral tariff rates in gravity? (2011) Downloads
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:eee:jjieco:v:27:y:2013:i:c:p:81-94

Access Statistics for this article

Journal of the Japanese and International Economies is currently edited by Takeo Hoshi

More articles in Journal of the Japanese and International Economies from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

 
Page updated 2019-12-12
Handle: RePEc:eee:jjieco:v:27:y:2013:i:c:p:81-94