Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/99996
Authors: 
Eppinger, Peter S.
Felbermayr, Gabriel J.
Year of Publication: 
2014
Series/Report no.: 
Ifo Working Paper 184
Abstract: 
We use an augmented gravity model to revisit the effect of similarity in income distributionson bilateral trade flows. Disentangling supply-side and demand-side mechanisms,we document a robust new regularity: while differences in average incomes betweentwo countries increase trade, differences in income dispersion reduce it. Our result shedsnew light on the Linder hypothesis and strengthens the role of non-homothetic preferencesin trade theory.
Subjects: 
International trade
income distribution
gravity model
Linder hypothesis
nonhomothetic preferences
JEL: 
F10
D31
Document Type: 
Working Paper

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