Gravity with gravitas: A solution to the border puzzle

• 成果类型: Article
• 署名作者: Anderson, JE; van Wincoop, E
• 署名单位: Boston College; National Bureau of Economic Research; University of Virginia
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/000282803321455214
• 发表日期: 2003
• 页码: 170-192
• 关键词: INTERNATIONAL-TRADE; equation; export; entry; MODEL

摘要

Gravity equations have been widely used to infer trade flow effects of various institutional arrangements. We show that estimated gravity equations do not have a theoretical foundation. This implies both that estimation suffers from omitted variables bias and that comparative statics analysis is unfounded. We develop a method that (i) consistently and efficiently estimates a theoretical gravity equation and (ii) correctly calculates the comparative statics of trade frictions. We apply the method to solve the famous McCallum border puzzle. Applying our method, we find that national borders reduce trade between industrialized countries by moderate amounts of 20-50 percent.