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Latent Unbalancedness in Three-Way Gravity Models

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  • Daniel Czarnowske
  • Amrei Stammann

Abstract

Many panel data sets used for pseudo-poisson estimation of three-way gravity models are implicitly unbalanced because uninformative observations are redundant for the estimation. We show with real data as well as simulations that this phenomenon, which we call latent unbalancedness, amplifies the inference problem recently studied by Weidner and Zylkin (2021).

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  • Daniel Czarnowske & Amrei Stammann, 2022. "Latent Unbalancedness in Three-Way Gravity Models," Papers 2203.02235, arXiv.org.
    • Handle: RePEc:arx:papers:2203.02235
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    1. J. M. C. Santos Silva & Silvana Tenreyro, 2006. "The Log of Gravity," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 641-658, November.
    2. Gopinath, G. & Helpman, . & Rogoff, K. (ed.), 2014. "Handbook of International Economics," Handbook of International Economics, Elsevier, edition 1, volume 4, number 4.
    3. Sergio Correia & Paulo Guimar~aes & Thomas Zylkin, 2019. "Verifying the existence of maximum likelihood estimates for generalized linear models," Papers 1903.01633, arXiv.org, revised Jun 2021.
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