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What Can We Learn from Bilateral Trade? Gravity and Beyond

Author

Listed:
  • Haveman, J.
  • Hummels, D.

Abstract

Much empirical international trade reserach requires a careful analysis of bilateral trade patterns. In this paper we examine a commonly used technique called the gravity equation. Though the use of the gravity equation on aggregate data is well-grounded in monopolistic competition trade theory, we show that central predictions necessary for its derivation can be rejected with simple tests on disaggregated data.

Suggested Citation

  • Haveman, J. & Hummels, D., 1997. "What Can We Learn from Bilateral Trade? Gravity and Beyond," Papers 97-002, Purdue University, Krannert School of Management - Center for International Business Education and Research (CIBER).
    • Handle: RePEc:fth:purkib:97-002
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    Citations

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    Cited by:

    1. Angela Cheptea & Lionel Fontagné & Soledad Zignago, 2014. "European export performance," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 150(1), pages 25-58, February.
    2. Simon J. Evenett & Wolfgang Keller, 2002. "On Theories Explaining the Success of the Gravity Equation," Journal of Political Economy, University of Chicago Press, vol. 110(2), pages 281-316, April.
    3. Keith Head & Thierry Mayer, 2000. "Non-Europe: The magnitude and causes of market fragmentation in the EU," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 136(2), pages 284-314, June.
    4. Roger White, 2010. "Migration and International Trade," Books, Edward Elgar Publishing, number 13670.
    5. William K. Hutchinson & James A. Dunlevy, 2001. "The Pro-Trade Effect of Immigration on American Exports During Period 1870 to 1910," Vanderbilt University Department of Economics Working Papers 0125, Vanderbilt University Department of Economics.
    6. Jonathan Eaton & Samuel Kortum, 1997. "Technology and Bilateral Trade," Boston University - Institute for Economic Development 79, Boston University, Institute for Economic Development.
    7. Keith Head & Thierry Mayer, 2000. "Non-Europe: The magnitude and causes of market fragmentation in the EU," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 136(2), pages 284-314, June.
    8. Dunlevy, James A. & Hutchinson, William K., 2001. "The Pro-Trade Effect of Immigration on American Exports During the Late Nineteenth and Early Twentieth Centuries," IZA Discussion Papers 375, Institute of Labor Economics (IZA).
    9. Arvind Panagariya, 1998. "Do transport costs justifyregional preferential trading arrangements? no," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 134(2), pages 280-301, June.

    More about this item

    Keywords

    INTERNATIONAL TRADE;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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