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Title:Exploring the intensive and extensive margins of world trade PDF Logo
Authors:Felbermayr, Gabriel J.
Kohler, Wilhelm K.
Issue Date:2004
Series/Report no.:CESifo working papers 1276
Abstract:World trade evolves at two margins. Where a bilateral trading relationship already exists it may increase through time (intensive margin). But trade may also increase if a trading bilateral relationship is newly established between countries that have not traded with each other in the past (extensive margin). We provide an empirical dissection of post-World-War- II growth in manufacturing world trade along these two margins. We propose a ?cornersolutions- version? of the gravity model to explain movements on both margins. A Tobit estimation of this model resolves the so-called ?distance-puzzle?. It also finds more convincing evidence than recent literature that WTO-membership enhances trade.
Subjects:bilateral trade
gravity model
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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