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Comparing alternative methods to estimate gravity models of bilateral trade

Estrella Gómez Herrera ()
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Estrella Gómez Herrera: Department of Economic Theory and Economic History, University of Granada.

Authors registered in the RePEc Author Service: Estrella Gomez-Herrera ()

No 10/05, ThE Papers from Department of Economic Theory and Economic History of the University of Granada.

Abstract: The gravity equation has been traditionally used to predict trade flows across countries. However, several problems related with its empirical application still remain unsolved. In this paper, I provide a survey of the recent literature concerning the specification and estimation methods of this equation. In addition, I compare the performance of two widely extended estimators, panel OLS and Poisson Pseudo Maximum Likelihood (PPML), for a dataset covering 80% of world trade.

Keywords: International trade; Gravity model; Estimation methods (search for similar items in EconPapers)
Pages: 29 pages
Date: 2010-09-01
New Economics Papers: this item is included in nep-ecm and nep-int
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Journal Article: Comparing alternative methods to estimate gravity models of bilateral trade (2013) Downloads
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