Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/121107
Authors: 
Jovanovic, Branimir
Year of Publication: 
2013
Series/Report no.: 
FIW Working Paper 106
Abstract: 
This paper evaluates the bias which may occur when trade elasticities are estimated using data on aggregate trade, instead of using data on bilateral trade. The exercise is done on the case of Macedonia. Elasticities obtained from aggregate-trade data, using the Autoregressive Distributed Lag approach, are compared with the elasticities obtained from bilateral-trade data, using dynamic heterogenous panels techniques. Results point out that the aggregation bias is sizeable and that relying on aggregate data can lead to wrong conclusions about the trade elasticities.
Subjects: 
trade elasticities
aggregation bias
dynamic panel
heterogenous panel
ARDL
Macedonia
JEL: 
F10
F14
F4
Document Type: 
Working Paper

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