Non-parametric Gravity

James Anderson

No 30807, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Non-parametric gravity as defined in this paper encompasses previous parametric forms. The model generates non-parametric sufficient statistics for arbitrage gains from trade and terms of trade, and a non-parametric elasticity of terms of trade with respect to supply. For world manufacturing trade 2000-2014, China’s gains rose 2%yearly and terms of trade fell 8.3%. US gains fell 2% yearly and terms of trade rose 5.5%. Counterfactual industrial policy that raises US 2014 world sales share by 1% lowers US gains per unit 0.72%, leaving a surplus of 0.28%. A novel minimum distance estimator generates the CES trade elasticity required.

JEL-codes: F10 F14 (search for similar items in EconPapers)
Date: 2022-12
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