Estimating the gravity model without gravity using panel data
(2011) In Applied Economics 43(6). p.641-649- Abstract
- This article examines the effects of zero trade on the estimation of the gravity model using both simulated and real data with a panel structure, which is different from the more conventional cross-sectional structure. We begin by showing that the usual log-linear estimation method can result in highly deceptive inference when some observations are zero. As an alternative approach, we suggest using the poisson fixed effects estimator. This approach eliminates the problems of zero trade, controls for heterogeneity across countries, and is shown to perform well in small samples.
Please use this url to cite or link to this publication:
https://lup.lub.lu.se/record/1764982
- author
- Westerlund, Joakim LU and Wilhelmsson, Fredrik LU
- organization
- publishing date
- 2011
- type
- Contribution to journal
- publication status
- published
- subject
- keywords
- panel data, trade, Poisson regression model, Gravity model of trade
- in
- Applied Economics
- volume
- 43
- issue
- 6
- pages
- 641 - 649
- publisher
- Routledge
- external identifiers
-
- wos:000287412700001
- scopus:79951686244
- ISSN
- 1466-4283
- DOI
- 10.1080/00036840802599784
- language
- English
- LU publication?
- yes
- id
- f139cb53-ec55-46fd-97c0-9f2de59ea66f (old id 1764982)
- date added to LUP
- 2016-04-01 10:09:58
- date last changed
- 2023-12-22 20:15:33
@article{f139cb53-ec55-46fd-97c0-9f2de59ea66f, abstract = {{This article examines the effects of zero trade on the estimation of the gravity model using both simulated and real data with a panel structure, which is different from the more conventional cross-sectional structure. We begin by showing that the usual log-linear estimation method can result in highly deceptive inference when some observations are zero. As an alternative approach, we suggest using the poisson fixed effects estimator. This approach eliminates the problems of zero trade, controls for heterogeneity across countries, and is shown to perform well in small samples.}}, author = {{Westerlund, Joakim and Wilhelmsson, Fredrik}}, issn = {{1466-4283}}, keywords = {{panel data; trade; Poisson regression model; Gravity model of trade}}, language = {{eng}}, number = {{6}}, pages = {{641--649}}, publisher = {{Routledge}}, series = {{Applied Economics}}, title = {{Estimating the gravity model without gravity using panel data}}, url = {{http://dx.doi.org/10.1080/00036840802599784}}, doi = {{10.1080/00036840802599784}}, volume = {{43}}, year = {{2011}}, }