Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/282470 
Year of Publication: 
2023
Series/Report no.: 
CESifo Working Paper No. 10782
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We nest an extended two-way fixed effect (ETWFE) estimator for staggered difference-in-differences within the structural gravity model. To test the ETWFE, we estimate the effects of regional trade agreements (RTAs). The results suggest that RTA estimates in the current gravity literature may be biased downward (by more than 50% in our sample). Sensitivity analyses confirm the robustness of our main findings and demonstrate the applicability of our methods in different settings. We expect the ETWFE methods to have significant implications for the estimates of other policy variables in the trade literature and for gravity regressions on migration and FDI flows.
Subjects: 
staggered difference-in-differences
gravity model
trade agreements
JEL: 
C13
C23
F10
F13
F14
Document Type: 
Working Paper
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