International Trade without CES: Estimating Translog Gravity

Dennis Novy

No 271178, Economic Research Papers from University of Warwick - Department of Economics

Abstract: This paper derives a micro-founded gravity equation in general equilibrium based on a translog demand system that allows for endogenous markups and substitution patterns across goods. In contrast to standard CES-based gravity equations, trade is more sensitive to trade costs if the exporting country only provides a small share of the destination country’s imports. As a result, trade costs have a heterogeneous impact across country pairs, with some trade flows predicted to be zero. I test the translog gravity equation and find strong empirical support in its favor.

Keywords: Financial; Economics (search for similar items in EconPapers)
Pages: 35
Date: 2010-11
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Citations: View citations in EconPapers (16)

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Related works:
Journal Article: International trade without CES: Estimating translog gravity (2013)
Working Paper: International trade without CES: estimating translog gravity (2013)
Working Paper: International Trade without CES: Estimating Translog Gravity (2012)
Working Paper: International Trade without CES: Estimating Translog Gravity (2012)
Working Paper: International Trade Without CES: Estimating Translog Gravity (2010)
Working Paper: International Trade without CES: Estimating Translog Gravity (2010)
Working Paper: International Trade without CES: Estimating Translog Gravity (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uwarer:271178

DOI: 10.22004/ag.econ.271178

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