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Bimodality & the performance of PPML

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  • Prehn, Sören
  • Brümmer, Bernhard

Abstract

There has been an extensive discussion on the applicability of Poisson Pseudo Maximum Likelihood (PPML) to trade. Here, we are going to analyse again the performance of PPML but in the light of a bimodal distribution; in addition, we also explicitly account for excess zeros. Simulations are based on a Bernoulli-Gamma distribution (a zero-inflated Gamma distribution). Again, our results are a confirmation of how well-behaved PPML is in general.

Suggested Citation

  • Prehn, Sören & Brümmer, Bernhard, 2012. "Bimodality & the performance of PPML," DARE Discussion Papers 1202, Georg-August University of Göttingen, Department of Agricultural Economics and Rural Development (DARE).
    • Handle: RePEc:zbw:daredp:1202
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    References listed on IDEAS

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    1. Martin, Will & Pham, Cong S., 2008. "Estimating the gravity model when zero trade flows are frequent," Working Papers eco_2008_03, Deakin University, Department of Economics.
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    1. Prilepskiy, Ilya (Прилепский, Илья), 2017. "Factors of Exports Dynamics and Import Substitution after the Sharp Exchange Rate Depreciation [Факторы Динамики Экспорта И Импортозамещения После Резкого Ослабления Курса Национальной Валюты]," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 3, pages 100-133, June.

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    Keywords

    Poisson Pseudo Maximum Likelihood; excess zeros; zero-inflated Gamma Distribution; simulation;
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