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ESTIMATING BORDER EFFECTS: THE IMPACT OF SPATIAL AGGREGATION

Cletus Coughlin () and Dennis Novy ()

International Economic Review, 2021, vol. 62, issue 4, 1453-1487

Abstract: Trade data are typically aggregated across space. In this article, we investigate the sensitivity of gravity estimation to spatial aggregation. We build a model in which micro regions are aggregated into macro regions. We then apply the model to the large literature on border effects in domestic and international trade. Our theory shows that aggregation leads to border effect heterogeneity. Larger regions and countries are systematically associated with smaller border effects. We test our theory with aggregate and industry‐level trade flows for U.S. states. Our results confirm the model's predictions, with strong heterogeneity patterns.

Date: 2021
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https://doi.org/10.1111/iere.12520

Related works:
Working Paper: Estimating border effects: the impact of spatial aggregation (2016) Downloads
Working Paper: Estimating Border Effects: The Impact of Spatial Aggregation (2016) Downloads
Working Paper: Estimating Border Effects: The Impact of Spatial Aggregation (2016) Downloads
Working Paper: Estimating border effects: the impact of spatial aggregation (2016) Downloads
Working Paper: Estimating Border Effects: The Impact of Spatial Aggregation (2016) Downloads
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International Economic Review is currently edited by Michael O'Riordan and Dirk Krueger

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