Controlling for Multilateral Resistance Terms in Linearized Trade Gravity Equations Without Spatial Econometrics

12 Pages Posted: 26 Feb 2016

See all articles by Peter H. Egger

Peter H. Egger

Ifo Institute for Economic Research - International Trade and Foreign Direct Investment; Ludwig-Maximilians University of Munich; CESifo (Center for Economic Studies and Ifo Institute for Economic Research

Kevin E. Staub

University of Melbourne - Department of Economics; IZA Institute of Labor Economics

Date Written: April 2, 2015

Abstract

This paper studies linearized spatial structural gravity models of bilateral trade à la Behrens, Ertur and Koch (2012). We show that these models do in fact not require spatial econometric methods for estimation. This result follows from the nature of the specific spatial weights matrix, and from the exporter- or importer-specific nature of some regressors and the approximation error. All structural model parameters are identified from a linear regression that uses a spatial lag of the dependent variable as a control function.

Keywords: Gravity models, Multilateral resistance, Spatial models

JEL Classification: F1, C23

Suggested Citation

Egger, Peter H. and Staub, Kevin E., Controlling for Multilateral Resistance Terms in Linearized Trade Gravity Equations Without Spatial Econometrics (April 2, 2015). Available at SSRN: https://ssrn.com/abstract=2737669 or http://dx.doi.org/10.2139/ssrn.2737669

Peter H. Egger

Ifo Institute for Economic Research - International Trade and Foreign Direct Investment ( email )

Poschingerstr. 5
Munich, DE-81679
Germany
+49 0 89 9224 1238 (Phone)
+49 0 89 985369 (Fax)

HOME PAGE: http://www.cesifo-group.de/portal/page?_pageid=36,425628&_dad=portal&_schema=PORTAL

Ludwig-Maximilians University of Munich

Schackstr. 4
Munich, 80539
Germany

CESifo (Center for Economic Studies and Ifo Institute for Economic Research

Poschinger Str. 5
Munich, DE-81679
Germany

Kevin E. Staub (Contact Author)

University of Melbourne - Department of Economics ( email )

Melbourne, Victoria 3010
Australia

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
28
Abstract Views
240
PlumX Metrics