Estimating the gravity model without gravity using panel data

Westerlund, Joakim and Wilhelmsson, Fredrik 2011, Estimating the gravity model without gravity using panel data, Applied economics, vol. 43, no. 6, pp. 641-649, doi: 10.1080/00036840802599784.

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Title Estimating the gravity model without gravity using panel data
Author(s) Westerlund, JoakimORCID iD for Westerlund, Joakim
Wilhelmsson, Fredrik
Journal name Applied economics
Volume number 43
Issue number 6
Start page 641
End page 649
Total pages 9
Publisher Routledge
Place of publication Abingdon, England
Publication date 2011
ISSN 0003-6846
Summary This article examines the effects of zero trade on the estimation of the gravity model using both simulated and real data with a panel structure, which is different from the more conventional cross-sectional structure. We begin by showing that the usual log-linear estimation method can result in highly deceptive inference when some observations are zero. As an alternative approach, we suggest using the poisson fixed effects estimator. This approach eliminates the problems of zero trade, controls for heterogeneity across countries, and is shown to perform well in small samples.
Language eng
DOI 10.1080/00036840802599784
Field of Research 159999 Commerce, Management, Tourism and Services not elsewhere classified
Socio Economic Objective 970115 Expanding Knowledge in Commerce, Management, Tourism and Services
HERDC Research category C1.1 Refereed article in a scholarly journal
Copyright notice ©2011, Taylor & Francis
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Document type: Journal Article
Collections: Faculty of Business and Law
School of Accounting, Economics and Finance
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