Structural gravity estimation & agriculture

Recently, discussion about the appropriate estimation of gravity trade models has started in agriculture. Here, we are going to review recent developments in the literature. It appears that fixed effects Poisson Pseudo Maximum Likelihood is not only the only consistent estimator [Santos Silva and Tenreyro, 2006] but also it already allows for a structural fit [Fally, 2012]. Fixed effects in conjunction with the adding-up property of Poisson Pseudo Maximum Likelihood - which has been so far neglected - can be harnessed to directly deduce multilateral resistance indexes (i.e. general equilibrium effects) from reduced-form estimation. This innovation made by Fally will ease comparative statics and incidence analysis, making Poisson Pseudo Maximum Likelihood even more preferable in practice.

[1]  Hervé Boulhol,et al.  Applying the GLM Variance Assumption to Overcome the Scale-Dependence of the Negative Binomial QGPML Estimator , 2014 .

[2]  R. Winkelmann,et al.  Consistent estimation of zero-inflated count models. , 2013, Health economics.

[3]  Hervé Boulhol,et al.  Scale-dependence of the Negative Binomial Pseudo-Maximum Likelihood Estimator , 2010 .

[4]  G. Philippidis,et al.  Capturing zero trade values in gravity equations of trade: A disaggregated sectoral analysis , 2011 .

[5]  Achim Spiller,et al.  Lack of pupils in German riding schools? - A causal-analytical consideration of customer satisfaction in children and adolescents. , 2012 .

[6]  Yoto Yotov,et al.  The Changing Incidence of Geography , 2008 .

[7]  Bernhard Brümmer,et al.  Payment decoupling and the intra-European calf trade. , 2015 .

[8]  James E. Anderson,et al.  Gold Standard Gravity , 2012 .

[9]  P. Egger,et al.  Estimating Consistent Border Effects in Gravity Models with Multilateral Resistance , 2012 .

[10]  A. Spiller,et al.  Die Zukunft des Großhandels in der Bio-Wertschöpfungskette , 2005 .

[11]  Bernhard Brümmer,et al.  Estimation issues in disaggregate gravity trade models , 2011 .

[12]  Stefan Busse,et al.  Interdependencies between fossil fuel and renewable energy markets: the German biodiesel market , 2010 .

[13]  James E. Anderson,et al.  Gravity with Gravitas: A Solution to the Border Puzzle , 2001 .

[14]  Martijn Burger,et al.  On the Specification of the Gravity Model of Trade: Zeros, Excess Zeros and Zero-Inflated Estimation , 2009 .

[15]  Silvana Tenreyro,et al.  Further Simulation Evidence on the Performance of the Poisson Pseudo-Maximum Likelihood Estimator , 2011 .

[16]  E. Helpman,et al.  ESTIMATING TRADE FLOWS : TRADING PARTNERS AND TRADING VOLUMES Elhanan Helpman , 2007 .

[17]  R. Feenstra,et al.  Border Effects and the Gravity Equation: Consistent Methods for Estimation , 2002 .

[18]  J. Cranfield,et al.  Selection bias in a gravity model of agrifood trade , 2013 .

[19]  Silvana Tenreyro,et al.  The Log of Gravity , 2004, The Review of Economics and Statistics.

[20]  James E. Anderson,et al.  How Much Does Geography Deflect Services Trade , 2012 .