Journal article
Unlocking New Methods to Estimate Country‐Specific Effects and Trade Elasticities With the Structural Gravity Model
Journal of applied econometrics (Chichester, England), v 40(6), pp 669-684
Sep 2025
Featured in Collection : UN Sustainable Development Goals @ Drexel
Abstract
We propose new methods to identify the impact of country‐specific characteristics, policies, and trade costs on bilateral trade flows within the structural gravity framework. We complement theory with a simple two‐stage estimating procedure and offer proof of concept by quantifying the impact of country‐specific research and development (R&D) expenditure on trade. Our results suggest a positive relationship overall but a larger impact of R&D on international (versus domestic) trade. Importantly, our methods deliver trade elasticity estimates without the need for price or tariff data, and we highlight this feature by obtaining aggregate and sectoral trade elasticity estimates, including for services.
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Details
- Title
- Unlocking New Methods to Estimate Country‐Specific Effects and Trade Elasticities With the Structural Gravity Model
- Creators
- Rebecca Freeman - Bank of EnglandMario Larch - University of BayreuthAngelos Theodorakopoulos (Corresponding Author) - Aston UniversityYoto V. Yotov - Drexel University
- Publication Details
- Journal of applied econometrics (Chichester, England), v 40(6), pp 669-684
- Publisher
- Wiley
- Number of pages
- 16
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Economics (School of Economics)
- Web of Science ID
- WOS:001491632400001
- Scopus ID
- 2-s2.0-105005801100
- Other Identifier
- 991022053783604721
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- Collaboration types
- Domestic collaboration
- International collaboration
- Web of Science research areas
- Economics
- Social Sciences, Mathematical Methods