Do Borders Really Slash Trade? A Meta-Analysis

Tomas Havranek and Zuzana Irsova

No wp1088, William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan

Abstract: National borders reduce trade, but most estimates of the border effect seem puzzlingly large. We show that major methodological innovations of the last decade combine to shrink the border effect to a mere 28% reduction in international trade ows worldwide. The border effect varies across regions: it is large in emerging countries, but close to zero in OECD countries. For the computation we collect 1,271 estimates of the border effect reported in 61 studies, codify 32 aspects of study design that may in uence the estimates, and use Bayesian model averaging to take into account model uncertainty. Our results suggest that methods systematically affect the estimated border effects. Especially important is the level of aggregation, measurement of internal and external distance, control for multilateral resistance, and treatment of zero trade flows. We find no evidence of publication bias.

Keywords: Bayesian model averaging; bilateral trade; borders; gravity; metaanalysis; publication selection bias (search for similar items in EconPapers)
JEL-codes: F14 F15 (search for similar items in EconPapers)
Pages: pages
Date: 2015-12-01
New Economics Papers: this item is included in nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Related works:
Journal Article: Do Borders Really Slash Trade? A Meta-Analysis (2017)
Working Paper: Do Borders Really Slash Trade? A Meta-Analysis (2015)
Working Paper: Do Borders Really Slash Trade? A Meta-Analysis (2015)
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