International Trade without CES: Estimating Translog Gravity

Dennis Novy

No 3008, CESifo Working Paper Series from CESifo

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: translog; gravity; trade costs; distance; trade cost elasticity (search for similar items in EconPapers)
JEL-codes: F11 F12 F15 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (14)

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https://www.cesifo.org/DocDL/cesifo1_wp3008rev.pdf (application/pdf)

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:ces:ceswps:_3008

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