Frankel and Romer revisited

Hildegunn Nordås

No 2018:4, Working Papers from Örebro University, School of Business

Abstract: Frankel and Romer (1999) proposed an instrument variable for trade intensity to robustly assess the causal impact of international trade on standards of living. The instrument is based on OLS estimates of the gravity equation and has been widely used in the literature. In this note I show that the instrument is unrelated to income in the mid-2000s. Re-estimating the gravity equation using PPML, I show that the resulting instrument is strongly related to GDP per capita, but weakly correlated with trade, suggesting that what is captured may be a direct link between geography and income.

Keywords: Trade; economic growth; instrument variables (search for similar items in EconPapers)
JEL-codes: F43 (search for similar items in EconPapers)
Pages: 7 pages
Date: 2018-02-26
New Economics Papers: this item is included in nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.oru.se/globalassets/oru-sv/institution ... rs2018/wp-4-2018.pdf Full text (application/pdf)

Related works:
Journal Article: Frankel and Romer revisited (2019)
Journal Article: Frankel and Romer revisited (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:oruesi:2018_004

Access Statistics for this paper

More papers in Working Papers from Örebro University, School of Business Örebro University School of Business, SE - 701 82 ÖREBRO, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by ().