
The Gravity Equation in International Trade
Interdependency between Trade Costs and International Trade Flows
Rudolph Stephan(Author)
Südwestdeutscher Verlag für Hochschulschriften AG Co. KG
Published on 3. July 2015
Book
Paperback/Softback
128 pages
978-3-8381-1729-4 (ISBN)
Description
The gravity equation is probably the most important tool in international economics to explain and estimate trade flows. However, since the gravity equation is important for political decisions, it is very important to achieve reliable results from its empirical application. One important discussion addresses the implausibly high measures for the impact of trade cost proxies on exports that frequently appear, especially in older works. The aim of the study is to contribute to the discussion about the suitability of the gravity equation's empirical applications. A new theory of endogenous trade costs is provided which shows that iceberg trade costs are likely to depend on exports. An interaction between exports and trade costs leads to a simultaneity problem. Moreover, this theory can be confirmed after estimating the gravity equation with an alternative econometric strategy: A simultaneous equation system using a theory-based index to compensate for the directly immeasurable trade costs. The result of the simultaneity approach and the use of constructed data for bilateral and multilateral trade costs is that the estimated direct effects of variables influencing exports decrease.
More details
Language
English
Product notice
Paperback (trade)
Unsewn / adhesive bound
Dimensions
Height: 220 mm
Width: 150 mm
Thickness: 9 mm
Weight
209 gr
ISBN-13
978-3-8381-1729-4 (9783838117294)
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Schweitzer Classification
Person
Stephan Rudolph has finished his studies in economics at TU Dresden in 2005. Afterwards, he has been working as a research assistant and lecturer at the chair of international economics of TU Dresden. He is especially interested in the empirical measure of international trade flows.