Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/167488
Authors: 
Anderson, James E.
Yotov, Yoto V.
Year of Publication: 
2017
Series/Report no.: 
CESifo Working Paper 6502
Abstract: 
Short run gravity is a geometric weighted average of long run gravity and bilateral capacity. The model features (i) joint trade costs endogenous to bilateral volumes, (ii) long run gravity as a limiting case of effcient investment in bilateral capacities, (iii) a structural ratio of short run to long run trade elasticities equal to a microfounded buyers’ incidence elasticity, and (iv) tractable short and long run models of the extensive margin. Application to manufacturing trade of 52 countries during the globalization period 1988-2006 strongly supports the model. Results solve several time invariance and trade elasticity puzzles in the literature.
Subjects: 
trade elasticity puzzles
export dynamics
missing globalization
JEL: 
F13
F14
F16
Document Type: 
Working Paper

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