Resource title

Effects of regional trade agreements using a static and dynamic gravity equation

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Resource description

This paper evaluates the static effects of preferential agreements between several economic blocs and areas using a dynamic gravity equation. The main aim is to investigate whether regionalism has fostered intra or/and extra blocs international trade, taking into account the existence of heterogeneity over time and across countries and testing whether a dynamic model is preferred to the traditional static specification of the gravity model. This paper argues that the gravity model should be best estimated using Blundell and Bond s (1998) system-GMM estimator. This procedure remedies some econometric problems such as regressor endogeneity, measurement error and weak instruments, and controls for timeinvariant country-specific effects such as distance or common language.

Resource author

Inmaculada Martínez-Zarzoso, Felicitas Nowak-Lehmann Danzinger, Nicholas Horsewood

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Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/27439

Resource license

Adapt according to the presented license agreement and reference the original author.