Comparing estimation methods of trade costs
Michael Knuchel ()
Aussenwirtschaft, 2018, vol. 69, issue 01, 81-106
Gravity models are used to understand intra- and international trade flows. Trade costs play a central role in these models, but are not clearly observable. In order to infer these costs, different estimation methods exist. The aim of this paper is to investigate these methods on systematic patterns in their predicted trade costs. By applying the methods to one dataset, the resulting trade cost estimates become comparable. For a given trade elasticity, the inverse gravity framework from Novy (2013a) is found to predict lower values than ratio gravity, used for example by Simonovska and Vaugh (2014). However, when moderating the impact of outliers, inverse gravity produces lower estimates.
Keywords: gravity models; trade costs; trade policy (search for similar items in EconPapers)
JEL-codes: F10 F14 F16 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:usg:auswrt:2018:69:01:81-106
Access Statistics for this article
More articles in Aussenwirtschaft from University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research Contact information at EDIRC.
Bibliographic data for series maintained by Stefan Legge ().