@techreport{Simonovska2011elasticity,
abstract = {Quantitative results from a large class of structural gravity models of international trade depend critically on the elasticity of trade with respect to trade frictions. We develop a new simulated method of moments estimator to estimate this elasticity from disaggregate price and trade-flow data and we use it within Eaton and Kortum's (2002) Ricardian model. We apply our estimator to new disaggregate price and trade-flow data for 123 countries in the year 2004. Our method yields a trade elasticity of roughly four, nearly fifty percent lower than Eaton and Kortum's (2002) approach. Moreover, robustness exercises result in trade elasticity estimates that are both lower and fall within a narrower range relative to the existing literature. This difference doubles the welfare gains from international trade.},
address = {Davis, Calif.},
author = {Ina Simonovska and Michael Waugh},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {F10; F11; F14; F17; 330; elasticity of trade; bilateral; gravity; price dispersion; indirect inference},
language = {eng},
number = {11,2},
publisher = {Dep. of Economics, Univ. of California},
title = {The elasticity of trade: Estimates and evidence},
type = {Working Papers, University of California, Department of Economics},
url = {http://hdl.handle.net/10419/58402},
year = {2011}
}
