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Ibero-Amerika-Institut für Wirtschaftsforschung (IAI), Universität Göttingen >
Discussion Papers, IAI, Universität Göttingen >
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http://hdl.handle.net/10419/27439
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| Title: | | Effects of regional trade agreements using a static and dynamic gravity equation  |
| Authors: | | Martínez-Zarzoso, Inmaculada Nowak-Lehmann D., Felicitas Horsewood, Nicholas |
| Issue Date: | | 2006 |
| Series/Report no.: | | Discussion papers // Ibero America Institute for Economic Research 149 |
| Abstract: | | This paper evaluates the static effects of preferential agreements between several economic blocs and areas using a dynamic gravity equation. The main aim is to investigate whether regionalism has fostered intra or/and extra blocs international trade, taking into account the existence of heterogeneity over time and across countries and testing whether a dynamic model is preferred to the traditional static specification of the gravity model. This paper argues that the gravity model should be best estimated using Blundell and Bonds (1998) system-GMM estimator. This procedure remedies some econometric problems such as regressor endogeneity, measurement error and weak instruments, and controls for timeinvariant country-specific effects such as distance or common language. |
| JEL: | | F14 F15 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Discussion Papers, IAI, Universität Göttingen
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