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Gravity redux: measuring international trade costs with panel data

Novy, Dennis (2013) Gravity redux: measuring international trade costs with panel data. Economic Inquiry, 51 (1). pp. 101-121. ISSN 0095-2583

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Identification Number: 10.1111/j.1465-7295.2011.00439.x


Barriers to international trade are known to be large but because of data limitations it is hard to measure them directly for a large number of countries over many years. To address this problem, I derive a micro-founded measure of bilateral trade costs that indirectly infers trade frictions from observable trade data. I show that this trade cost measure is consistent with a broad range of leading trade theories including Ricardian and heterogeneous firms models. In an application I show that U.S. trade costs with major trading partners declined on average by about 40 between 1970 and 2000, with Mexico and Canada experiencing the biggest reductions.

Item Type: Article
Official URL:
Additional Information: © 2012 Western Economic Association International
Divisions: Centre for Economic Performance
Subjects: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HD Industries. Land use. Labor
J Political Science > JZ International relations
JEL classification: F - International Economics > F1 - Trade > F10 - General
F - International Economics > F1 - Trade > F15 - Economic Integration
Date Deposited: 01 Sep 2014 14:27
Last Modified: 20 Oct 2021 03:18
Funders: Economic and Social Research Council, Grant RES-000-22-3112

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