The proper panel econometric specification of the gravity equation: A three-way model with bilateral interaction effects

Peter Egger and Michael Pfaffermayr

Empirical Economics, 2003, vol. 28, issue 3, 580 pages

Abstract: We argue that the proper specification of a panel gravity model should include main (exporter, importer, and time) as well as time invariant exporter-by-importer (bilateral) interaction effects. In a panel of 11 APEC countries, the latter are highly significant and account for the largest part of variation. Copyright Springer-Verlag Berlin Heidelberg 2003

Keywords: Key words: Gravity equation; Panel econometrics, JEL classification: C33; F14; F15, (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (195)

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DOI: 10.1007/s001810200146

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