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Estimation of structural gravity quantile regression models

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  • Badi Baltagi
  • Peter Egger

Abstract

This paper demonstrates that observable trade cost measures in logs are not linearly related to the overall log trade costs nor to the conditional mean of log bilateral trade flows. This is shown using a simultaneous quantiles regression model and data on bilateral exports in 2008. This is modeled as a function of geographical, cultural, and historical observables and a host of unobservable trade cost measures in a structural model of bilateral trade. In this model, trade costs differ not only statistically but also quantitatively across the quantiles of the conditional distribution of bilateral exports. As a consequence, comparative static effects of these trade costs vary as well. Copyright Springer-Verlag Berlin Heidelberg 2016

Suggested Citation

  • Badi Baltagi & Peter Egger, 2016. "Estimation of structural gravity quantile regression models," Empirical Economics, Springer, vol. 50(1), pages 5-15, February.
    • Handle: RePEc:spr:empeco:v:50:y:2016:i:1:p:5-15
    DOI: 10.1007/s00181-015-0956-5
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    Cited by:

    1. Lionel Fontagné & Gianluca Orefice & Roberta Piermartini, 2020. "Making small firms happy? The heterogeneous effect of trade facilitation measures," Review of International Economics, Wiley Blackwell, vol. 28(3), pages 565-598, August.
    2. Qi Li & Vasilis Sarafidis & Joakim Westerlund, 2021. "Essays in honor of Professor Badi H Baltagi," Empirical Economics, Springer, vol. 60(1), pages 1-11, January.
    3. Rodolfo Metulini & Roberto Patuelli & Daniel A. Griffith, 2018. "A Spatial-Filtering Zero-Inflated Approach to the Estimation of the Gravity Model of Trade," Econometrics, MDPI, vol. 6(1), pages 1-15, February.
    4. Neary, Peter & Carrère, Céline & Mrázová, Monika, 2020. "Gravity without Apologies: The Science of Elasticities, Distance, and Trade," CEPR Discussion Papers 14473, C.E.P.R. Discussion Papers.
    5. Céline Carrère & Monika Mrázová & J Peter Neary, 2020. "Gravity Without Apology: the Science of Elasticities, Distance and Trade," The Economic Journal, Royal Economic Society, vol. 130(628), pages 880-910.
    6. Andrew Myburgh & Jordi Paniagua, 2016. "Does International Commercial Arbitration Promote Foreign Direct Investment?," Journal of Law and Economics, University of Chicago Press, vol. 59(3), pages 597-627.
    7. Li, Qi & Sarafidis, Vasilis & Westerlund, Joakim, 2020. "Essays in Honor of Professor Badi H Baltagi: Editorial," MPRA Paper 104751, University Library of Munich, Germany.
    8. Rishav Bista & Erik Figueiredo & Brandon Sheridan, 2019. "Heterogeneous time zone effects and exports," Economics Bulletin, AccessEcon, vol. 39(2), pages 1039-1046.
    9. Jia Chen Author-Name-First: Jia & Yongcheol Shin & Chaowen Zheng, 2023. "Dynamic Quantile Panel Data Models with Interactive Effects," Economics Discussion Papers em-dp2023-06, Department of Economics, University of Reading.
    10. Xu, Tao, 2019. "Economic freedom and bilateral direct investment," Economic Modelling, Elsevier, vol. 78(C), pages 172-179.
    11. Cuadros, Ana & Martín-Montaner, Joan & Paniagua, Jordi, 2019. "Migration and FDI: The role of job skills," International Review of Economics & Finance, Elsevier, vol. 59(C), pages 318-332.
    12. Anna Golovko & Hasan Sahin, 2021. "Analysis of international trade integration of Eurasian countries: gravity model approach," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 11(3), pages 519-548, September.

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    More about this item

    Keywords

    Gravity models; Quantile regression; Structural estimation; C14; C21; F14;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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