Bonus vetus OLS: A simple method for approximating international trade-cost effects using the gravity equation

2009 ◽  
Vol 77 (1) ◽  
pp. 77-85 ◽  
Author(s):  
Scott L. Baier ◽  
Jeffrey H. Bergstrand
Keyword(s):  
International Trade ◽  
Gravity Equation ◽  
Trade Cost ◽  
Simple Method

scholarly journals Gravity and Heterogeneous Trade Cost Elasticities

2021 ◽  
Author(s):  
Natalie Chen ◽  
Dennis Novy
Keyword(s):  
International Trade ◽  
Bilateral Trade ◽  
Trade Agreements ◽  
Gravity Equation ◽  
Trade Costs ◽  
Currency Unions ◽  
Trade Cost ◽  
New Approach ◽  
Substantial Heterogeneity

Abstract How do trade costs affect international trade? This paper offers a new approach. We rely on a flexible gravity equation that predicts variable trade cost elasticities, both across and within country pairs. We apply this framework to popular trade cost variables such as currency unions, trade agreements, and WTO membership. While we estimate that these variables are associated with increased bilateral trade on average, we find substantial heterogeneity. Consistent with the predictions of our framework, trade cost effects are strong for ‘thin’ bilateral relationships characterised by small import shares, and weak or even zero for ‘thick’ relationships.

The Gravity Equation in International Trade in Services

2006 ◽  
Vol 142 (1) ◽  
pp. 92-121 ◽  
Author(s):  
Fukunari Kimura ◽  
Hyun-Hoon Lee
Keyword(s):  
International Trade ◽  
Gravity Equation ◽  
Trade In Services
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