Estimating the gravity equation with the actual number of exporting firms
To estimate correctly the effect of variable trade costs of firms' exports, the gravity equation should control for the lumber of firms that participate in foreign markets. Due to the absence of these data, previous studies control for this omitted variable using econometric strategies that may...
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Universidad de Chile. Departamento de Economía
2013
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oai:scielo:S0718-528620130001000012013-07-24Estimating the gravity equation with the actual number of exporting firmsMinondo,AsierRequena,Francisco Gravity equation exporting firms distance trade costs OECD To estimate correctly the effect of variable trade costs of firms' exports, the gravity equation should control for the lumber of firms that participate in foreign markets. Due to the absence of these data, previous studies control for this omitted variable using econometric strategies that may also lead to inconsistent estimates. To overcome this problem the present paper estimates a gravity equation using a new database compiled by the OECD and EUROSTAT that reports the number of exporting firms by reporter and partner country. We show that not controlling for the extensive margin of trade introduces very serious biases in the estimated trade cost coefficients.info:eu-repo/semantics/openAccessUniversidad de Chile. Departamento de EconomíaEstudios de economía v.40 n.1 20132013-06-01text/htmlhttp://www.scielo.cl/scielo.php?script=sci_arttext&pid=S0718-52862013000100001en10.4067/S0718-52862013000100001 |
| institution |
Scielo Chile |
| collection |
Scielo Chile |
| language |
English |
| topic |
Gravity equation exporting firms distance trade costs OECD |
| spellingShingle |
Gravity equation exporting firms distance trade costs OECD Minondo,Asier Requena,Francisco Estimating the gravity equation with the actual number of exporting firms |
| description |
To estimate correctly the effect of variable trade costs of firms' exports, the gravity equation should control for the lumber of firms that participate in foreign markets. Due to the absence of these data, previous studies control for this omitted variable using econometric strategies that may also lead to inconsistent estimates. To overcome this problem the present paper estimates a gravity equation using a new database compiled by the OECD and EUROSTAT that reports the number of exporting firms by reporter and partner country. We show that not controlling for the extensive margin of trade introduces very serious biases in the estimated trade cost coefficients. |
| author |
Minondo,Asier Requena,Francisco |
| author_facet |
Minondo,Asier Requena,Francisco |
| author_sort |
Minondo,Asier |
| title |
Estimating the gravity equation with the actual number of exporting firms |
| title_short |
Estimating the gravity equation with the actual number of exporting firms |
| title_full |
Estimating the gravity equation with the actual number of exporting firms |
| title_fullStr |
Estimating the gravity equation with the actual number of exporting firms |
| title_full_unstemmed |
Estimating the gravity equation with the actual number of exporting firms |
| title_sort |
estimating the gravity equation with the actual number of exporting firms |
| publisher |
Universidad de Chile. Departamento de Economía |
| publishDate |
2013 |
| url |
http://www.scielo.cl/scielo.php?script=sci_arttext&pid=S0718-52862013000100001 |
| work_keys_str_mv |
AT minondoasier estimatingthegravityequationwiththeactualnumberofexportingfirms AT requenafrancisco estimatingthegravityequationwiththeactualnumberofexportingfirms |
| _version_ |
1714205041982701568 |