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N° 2008-30 |
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| December 2008 |
| Structural Gravity Equations with Intensive and Extensive Margins |
Matthieu Crozet
Pamina Koenig |
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| Recent trade models with heterogenous firms have considerable consequences on the interpretation
of gravity equations. Chaney (2008) shows that the effect of distance on trade margins
incorporates three parameters: the elasticity of substitution between goods, the elasticity
of trade costs with respect to distance, and the degree of firm heterogeneity. We structurally
estimate the parameters of trade flows in Chaney’s model using French firm-level export data
for 1986-1992, and controlling for the fixed costs of exporting. Our estimated parameters
are consistent, for 27 out of 34 industries, with the theoretical model. They also allow us to
evaluate the effects of transport cost separately from the effects of tarifs, without having to
resort to detailed data on trade frictions. |
Non-technical summary  |
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Résumé
non-technique
en français |
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| Full text |
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| Gravity equations; international trade; firm heterogeneity |
Keywords |
| F12 |
JEL classification |
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