Bilateral Trade and Similarity of Income Distributions: The Role of Second Moments

Peter S. Eppinger; Gabriel J. Felbermayr

We use an augmented gravity model to revisit the effect of similarity in income distributions on bilateral trade flows. Disentangling supply-side and demand-side mechanisms, we document a robust new regularity: while differences in average incomes between two countries increase trade, differences in income dispersion reduce it. Our result sheds new light on the Linder hypothesis and strengthens the role of non-homothetic preferences in trade theory.

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Year of publication:	2014
Authors:	Eppinger, Peter S. ; Felbermayr, Gabriel
Publisher:	Munich : ifo Inst.
Subject:	International trade \| income distribution \| gravity model \| Linder hypothesis \| nonhomothetic preferences \| Einkommensverteilung \| Income distribution \| Gravitationsmodell \| Gravity model \| Welt \| World \| Außenwirtschaftstheorie \| International economics \| Schätzung \| Estimation \| Nationaleinkommen \| National income

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Extent:	Online-Ressource ([1], 8, V S.)
Series:	Ifo working papers. - Munich : [Verlag nicht ermittelbar], ZDB-ID 2681107-8. - Vol. 184
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Arbeitspapier ; Working Paper ; Graue Literatur ; Non-commercial literature
Language:	English
Notes:	Systemvoraussetzungen: Acrobat Reader
Other identifiers:	hdl:10419/99996 [Handle]
Classification:	F10 - Trade. General ; D31 - Personal Income, Wealth and Their Distributions
Source:	ECONIS - Online Catalogue of the ZBW

Persistent link: https://www.econbiz.de/10010374075