This paper describes an extension of Duchin’s World Trade Model to include the explicit representation of transportation costs, permitting the endogenous determination of bilateral trade flows and region-specific prices. The original model is a linear program that, based on comparative advantage and the minimization of factor use, determines regional production and trade flows as well as world ...

Cross-border production fragmentation enables countries to export domestic value added not only directly in the form of gross exports of final goods, but also indirectly by participating in global supply chains. This paper studies the determinants of trade in value added. I incorporate the global input-output structure into an international trade model to derive an approximate gravity equation ...

Does leaving a currency union reduce international trade? We answer this question using a large annual panel data set covering 217 countries from 1948 through 1997. During this sample a large number of countries left currency unions; they experienced economically and statistically significant declines in bilateral trade, after accounting for other factors. Assuming symmetry, we estimate that a ...

What factors drove globalization in the late nineteenth century? We employ a new micro-founded measure of bilateral trade costs based on a standard model of trade in differentiated goods to address this question. These trade costs gauge the difference between observed bilateral trade and frictionless trade. They comprise tariffs, transportation costs, and all other factors that impede internati...

t his paper investigates the gain of bilateral trade between china and u.s. in manufacturing sectors when both countries play a role in asymmetric (biased) growth of  international trade. our model includes a special case of biased growth theory in international trade. we collected labor productivity, export and import data by using classification of manufacturing industries, for u.s. and china...

Does leaving a currency union reduce international trade? We answer this question using a large annual panel data set covering 217 countries from 1948 through 1997. During this sample a large number of countries left currency unions; they experienced economically and statistically significant declines in bilateral trade, after accounting for other factors. Assuming symmetry, we estimate that a ...

Abstract This article is an empirical attempt to explore the relationship between sanctions (financial and non-financial), oil price shocks and Iran-Russian bilateral trade flows over the period 1991–2014. In contrast to earlier studies in which a gravity model has been estimated through a panel data approach, in this paper the authors apply a gravity model for only two countries and do the es...

How Outsourcing Affects Bilateral Political Relations One issue the literature neglects is how outsourcing stimulates trade (imports, exports and foreign direct investment), thereby affecting political relations. However, at least as far back as 1750, economic philosophers such as Baron de Montesquieu in his L’Esprit des Lois, argued, “peace is the natural effect of trade.” This paper first rev...

This paper aims to analyse the value of merchandise through a broad category of trade between Australia and nine selected Latin American countries by using a gravity model focusing on the period from 1998 to 2004. The traditional crosssectional data is a useful tool to understand this bilateral trade focusing on exports and imports through primary products, manufactured products, and total merc...

Our paper provides a theoretical analysis of the potential trade implications of a currency union focusing on the crucial role of economic dissimilarities among countries. Modeling the adoption of a common currency as the elimination of transaction costs on international trade, we show that a currency union enhances bilateral trade among members while it reduces bilateral trade between members ...