Modelling the Extensive Margin of World Trade

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  • Modelling the Extensive Margin of World Trade Book Detail

  • Author : Gabriel J. Felbermayr
  • Release Date : 2011
  • Publisher :
  • Genre :
  • Pages : 0
  • ISBN 13 :
  • File Size : 83,83 MB

Modelling the Extensive Margin of World Trade by Gabriel J. Felbermayr PDF Summary

Book Description: Recent literature has argued that, contrary to the results of a seminal paper by Rose (2004), General Agreement on Tariffs and Trade (GATT)/World Trade Organization (WTO) membership does promote bilateral trade, at least for developed economies and if membership includes non-formal compliance. We review the literature to identify open issues. We then develop a simple extension of the gravity model that gives rise to an extensive country margin of trade separating positive trade from zero trade country pairs. The model is used to identify WTO membership effects at both the intensive and the extensive margins. Empirical estimation of this model, based on Poisson pseudo-maximum likelihood methods with exporter and importer fixed effects, allows us to readdress the empirical issue of whether GATT/WTO membership does or does not promote trade. We find that GATT membership was successful on the extensive margin of world trade but not on the intensive margin. For the recent WTO episode (1995-2008), we find consistent and robust evidence for a substantial trade-creating role of membership which is driven primarily by the intensive margin. WTO membership results in higher bilateral trade of about 40 per cent.

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The Melitz model highlights the importance of the extensive margin (the number of firms exporting) for trade flows. Using the World Bank’s Exporter Dynamics D

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The Melitz model highlights the importance of the extensive margin (the number of firms exporting) for trade flows. Using the World Bank's Exporter Dynamics Dat

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File Size : 43,43 MB
Total View : 3476 Views
DOWNLOAD

The Melitz model highlights the importance of the extensive margin (the number of firms exporting) for trade flows. Using the World Bank's Exporter Dynamics Dat