Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/26327 
Year of Publication: 
2008
Series/Report no.: 
CESifo Working Paper No. 2282
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
This article deals with econometric developments for the estimation of gravity model, which allow to get convergent parameter estimates even when a correlation exists between the explanatory variables and the specific unobservable characteristics of each individual. We implement panel data econometric techniques to characterize bilateral trade flows between heterogeneous economies. Our econometric results based on a sample of 4 Central and Eastern European countries (CEEC-4) and 19 OECD countries over a 18-year period highlight the importance by taking into account the unobservable heterogeneity to obtain a robust empirical specification and unbiased coefficients.
Subjects: 
gravity models
unobservable heterogeneity
panel data models
international trade flows
JEL: 
F13
F15
C23
Document Type: 
Working Paper
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