Non-discriminatory Trade Policies in Structural Gravity Models. Evidence from Monte Carlo Simulations

Sellner, Richard (November 2017) Non-discriminatory Trade Policies in Structural Gravity Models. Evidence from Monte Carlo Simulations. IHS Economics Series 335, 25 p.

[img]
Preview
Text
es-335.pdf - Published Version

Download (409kB) | Preview
[img] Text
user_agreemetn_es335.pdf
Restricted to Repository staff only

Download (498kB)

Abstract or Table of Contents

This paper provides Monte Carlo simulation evidence on the performance of methods used for identifying the effects of non-discriminatory trade policy (NDTP) variables in structural gravity models (SGM). The benchmarked methods include the identification strategy of Heid, Larch & Yotov (2015) that utilizes data on intra-national trade ows and three other methods that do not rely on this data. Results indicate that under the assumption of a data generating process that conforms with SGM theory, data on intra-national trade ows is required for identification. The bias of the three methods that do not utilize this data, is a result of the correlation between the NDTP variable and the collinear fixed effects. The MC results and an empirical application demonstrate the severity of this bias in methods that have been applied in previous empirical research.

Item Type: IHS Series
Keywords: Structural Gravity Model, Non-discriminatory Trade Policies, Monte Carlo Simulation
Classification Codes (e.g. JEL): C31, F10, F13
Research Units: Divisions > Former Research Groups > Macroeconomics and Public Finance
Status: Published
Date Deposited: 21 Dec 2017 07:55
Last Modified: 19 Oct 2018 15:56
URI: http://irihs.ihs.ac.at/id/eprint/4467

Actions (login required)

View Item View Item