Working paper
Gravity, Scale and Exchange Rates
2013
Abstract
We develop a structural gravity model that introduces scale effects in bilateral trade. Scale effects and incomplete passthrough give two channels through which exchange rates have real effects on trade patterns. Estimates from Canadian provincial trade data identify these effects through their interaction with the US border. We find statistically and quantitatively significant economies of scale in cross-border trade in almost 2/3 of sectors. Real effects of exchange rate changes on trade are found for 12 of 19 goods sectors and none of 9 services sectors.
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Details
- Title
- Gravity, Scale and Exchange Rates
- Creators
- James E AndersonMykyta VesselovskyYoto V YotovNBER
- Series
- NBER working paper series
- Publisher
- National Bureau of Economic Research; Cambridge, Mass
- Resource Type
- Working paper
- Language
- English
- Academic Unit
- Economics (School of Economics)
- Other Identifier
- 991021807003904721