Estimating the extensive margin of trade

Santos Silva, Joao, Tenreyro, Silvana ORCID: 0000-0002-9816-7452 and Wei, Kehai (2014) Estimating the extensive margin of trade. Journal of International Economics, 93 (1). pp. 67-75. ISSN 0022-1996

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Abstract

Understanding and quantifying the determinants of the number of sectors or firms exporting in a given country is of relevance for the assessment of trade policies. Estimation of models for the number of exporting sectors, however, poses a challenge because the dependent variable has both a lower and an upper bound, implying that the partial effects of the explanatory variables on the conditional mean of the dependent variable cannot be constant. We argue that ignoring these bounds can lead to erroneous conclusions and propose a flexible specification that accounts for the doubly-bounded nature of the dependent variable. We empirically investigate the problem and the proposed solution, finding significant differences between estimates obtained with the proposed estimator and those obtained with standard approaches.

Item Type:	Article
Official URL:	http://www.journals.elsevier.com/journal-of-intern...
Additional Information:	© 2014 The Authors © CC BY-NC-ND 3.0
Divisions:	Economics Centre for Economic Performance
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HF Commerce
JEL classification:	C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods: General > C13 - Estimation C - Mathematical and Quantitative Methods > C2 - Econometric Methods: Single Equation Models; Single Variables > C25 - Discrete Regression and Qualitative Choice Models C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C51 - Model Construction and Estimation F - International Economics > F1 - Trade > F11 - Neoclassical Models of Trade F - International Economics > F1 - Trade > F14 - Country and Industry Studies of Trade
Date Deposited:	28 Feb 2014 16:10
Last Modified:	24 Apr 2024 05:39
Projects:	PEst-OE/EGE/UI0491/2013, 240852
Funders:	Fundação para a Ciência e Tecnologia, European Research Council, Research on Economic Fluctuations and Globalization
URI:	http://eprints.lse.ac.uk/id/eprint/55937

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