Gravity with Gravitas: A Solution to the Border Puzzle
نویسنده
چکیده
Gravity equations have been widely used to infer trade ow effects of various institutional arrangements. We show that estimated gravity equations do not have a theoretical foundation. This implies both that estimation suffers from omitted variables bias and that comparative statics analysis is unfounded. We develop a method that (i) consistently and ef ciently estimates a theoretical gravity equation and (ii) correctly calculates the comparative statics of trade frictions. We apply the method to solve the famous McCallum border puzzle. Applying our method, we nd that national borders reduce trade between industrialized countries by moderate amounts of 20–50 percent. (JEL F10, F15)
منابع مشابه
Solution of propagation of acoustic-gravity waves in the atmosphere using finite difference method of order two
Investigating waves propagation’s equation in the atmosphere is one of the important and widely used issues in various sciences, which has attracted many researchers. A type of propagating waves is an acoustic-gravity wave. These type of waves have a lot of stationarity properties and can be propagate to a high altitude in the atmosphere. The equation of acoustic-gravity wave propagation is a h...
متن کاملThe Role of Unbalanced Balance Sheet of Banking System in Creating the Puzzle of Interest Rate, Inflation and Liquidity Growth: Evidence from Iran
The analysis of macroeconomic variables for current situation in Iran indicates a Conundrum. Solving this puzzle is vital for Central Bank of Iran in order to choose an appropriate approach for monetary policy and banking supervision. Increase in liquidity growth rate, significant decrease of inflation rate and interest rate rigidity are the three sides of this puzzle. This study designs an inn...
متن کاملApproximate Solution of Sensitivity Matrix of Required Velocity Using Piecewise Linear Gravity Assumption
In this paper, an approximate solution of sensitivity matrix of required velocity with final velocity constraint is derived using a piecewise linear gravity assumption. The total flight time is also fixed for the problem. Simulation results show the accuracy of the method. Increasing the midway points for linearization, increases the accuracy of the solution, which this, in turn, depends on the...
متن کاملOPTIMAL DESIGN OF GRAVITY DAM USING DIFFERENTIAL EVOLUTION ALGORITHM
The shape optimization of gravity dam is posed as an optimization problem with goals of minimum value of concrete, stresses and maximum safety against overturning and sliding need to be achieved. Optimally designed structure generally saves large investments especially for a large structure. The size of hydraulic structures is usually huge and thus requires a huge investment. If the optimizatio...
متن کامل