The Gravity Model: An Illustration of Structural Estimation as Calibration

Economic Inquiry, Vol. 46, Issue 4, pp. 511-527, October 2008

17 Pages Posted: 27 Oct 2008

See all articles by Edward J. Balistreri

Edward J. Balistreri

Iowa State University

Russell H. Hillberry

University of Melbourne - Department of Economics; World Bank - Development Research Group (DECRG)

Abstract

Dawkins, Srinivasan, and Whalley (Calibration,Handbook of Econometrics, 2001) propose that estimation is calibration. We illustrate their point by examining a leading econometric application in the study of international and interregional trade by Anderson and van Wincoop (Gravity with Gravitas: A Solution to the Border Puzzle, American Economic Review, 2003). We replicate the econometric process and show it to be a calibration of a general equilibrium model. Our approach offers unique insights into structural estimation, and we highlight the importance of traditional calibration considerations when one uses econometric techniques to calibrate a model for comparative policy analysis.

JEL Classification: F10, C13, C60

Suggested Citation

Balistreri, Edward J. and Hillberry, Russell H., The Gravity Model: An Illustration of Structural Estimation as Calibration. Economic Inquiry, Vol. 46, Issue 4, pp. 511-527, October 2008, Available at SSRN: https://ssrn.com/abstract=1288872 or http://dx.doi.org/10.1111/j.1465-7295.2007.00093.x

Edward J. Balistreri (Contact Author)

Iowa State University ( email )

260 Heady Hall
Ames, IA 50011
United States
3032531674 (Phone)

Russell H. Hillberry

University of Melbourne - Department of Economics ( email )

Melbourne, 3010
Australia

World Bank - Development Research Group (DECRG)

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

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