Gravity for Dummies and Dummies for Gravity Equations / Richard Baldwin, Daria Taglioni.

Format:

Book

Author/Creator:

Baldwin, Richard.

Contributor:

National Bureau of Economic Research.

Taglioni, Daria.

Series:

Working Paper Series (National Bureau of Economic Research) no. w12516.

NBER working paper series no. w12516

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2006.

Summary:

This paper provides a minimalist derivation of the gravity equation and uses it to identify three common errors in the literature, what we call the gold, silver and bronze medal errors. The paper provides estimates of the size of the biases taking the currency union trade effect as an example. We generalize Anderson-Van Wincoop's multilateral trade resistance factor (which only works with cross section data) to allow for panel data and then show that it can be dealt with using time-varying country dummies with omitted determinants of bilateral trade being dealt with by time-invariant pair dummies.

Notes:

Print version record

September 2006.