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Border Effect Estimates for France and Germany Combining International Trade and Intra-national Transport Flows

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Abstract

Since the seminal contribution of McCallum (1995) economists have tried to estimate the border effect for other countries than the US and Canada, but have been confronted with a key data problem: data on regional trade flows are extremely rare. The different approaches put forward to overcome this lack of information have been shown to hinge crucially on certain distance measures. The main purpose of this paper is to develop a method that allows us determining border effects with a high degree of accuracy in the absence of intra-national trade data. We show how to improve the estimation of border effects at the example of France and Germany using data on regional transportation flows. Our results indicate that France trades about eight times more and Germany about three times more with itself than with other EU countries compared to the predictions of the gravity equation.

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  • Matthias Helble, 2006. "Border Effect Estimates for France and Germany Combining International Trade and Intra-national Transport Flows," IHEID Working Papers 13-2006, Economics Section, The Graduate Institute of International Studies, revised Jun 2006.
    • Handle: RePEc:gii:giihei:heiwp13-2006
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    More about this item

    Keywords

    Border Effect; Gravity Equation; Transport Infrastructure;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration

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