The New Stability and Growth Pact: Primum Non Nocere
In: Centre for European Policy Studies Working Paper No. 344
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In: Centre for European Policy Studies Working Paper No. 344
SSRN
Working paper
In: Documento di Lavoro, n. 31/03
World Affairs Online
In: The B.E. Journal of Economic Analysis & Policy, Band 5, Heft 1
ISSN: 1935-1682
Abstract
The paper shows how - using as an example the trade flows between eleven European countries and 31 OECD `reporting' countries - the result of a gravity model, in terms of potential trade, changes substantially when country heterogeneity and dynamics are taken into account.
Comparing the in-sample trade potential index derived from various estimators yields three different results: (a) the average trade potential index poorly represents the distribution of yearly trade potentials; (b) the index converges towards the demarcation value corresponding to the equality between observed and predicted trade flows when country heterogeneity and dynamics are taken into account; (c) the sign of its yearly average is not the right statistic with which to determine the (in)existence of unrealized trade potentials.
Finally, the index derived from a dynamic specification with multilateral fixed-effects is better able to reflect the role played by the time-variant country-specific unobservable element associated with the possible presence of positive or negative trade potentials.
In: Topics in economic analysis & policy, Band 5, Heft 1
ISSN: 1538-0653
SSRN
Working paper
In: Documento di Lavoro, n. 24/01
World Affairs Online
In: Economic Analysis and Policy, Band 76, S. 946-961
In: Review of International Economics, Band 27, Heft 3, S. 955-980
SSRN
In: STRECO_2021_00880
SSRN
In: Banque de France Working Paper No. 471
SSRN
Working paper