Abstract
By using a log-linear Taylor-series expansion to linearize the multilateral resistance terms, this study aims to estimate the theory-based gravity equation in mixed effects model to obtain not only unbiased and consistent but also efficient coefficient estimates of trade cost variables. We show that coefficient estimates of trade cost variables estimated using mixed effects model are close to those found by the existing literature; however, only those in this paper are efficient as a result of accounting for unobserved country heterogeneity and approximation errors.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
