Quantitative results from a large class of international trade models depend critically on the elasticity of trade with respect to trade frictions. We develop a simulated method of moments estimator to estimate this elasticity from disaggregate price and trade-flow data using the Ricardian...

Does trade openness cause higher GDP per capita? Since the seminal instrumental variables (IV) estimates of Frankel and Romer [F&R](1999) important doubts have surfaced. Is the correlation spurious and driven by omitted geographical and institutional variables? In this paper, we generalize F&R's...

We review and interpret the main theoretical developments in the gravity literature from its very early, a-theoretical applications to the latest structural contributions. We also discuss challenges and implement methods to estimate empirical gravity equations. We finish with a presentation and...

Japan and India signed the much-awaited Comprehensive Economic Partnership Agreement (CEPA) on 16th February 2011. The CEPA will eliminate tariff on goods that account for 94% of their two way trade over ten years and will boost bilateral trade and investment. Indian exports which were subject...

For a long time globalization could be seen everywhere but in gravity estimates. We offer evidence how globalization affects manufacturing trade over the period 1986-2006 and show that, on average, the effect of distance has fallen whereas the effects of proximity and regional trade agreements...

Has the Kyoto Protocol induced carbon leakage? We conduct the first empirical ex-post evaluation of the Protocol. We derive a theoretical gravity equation for the CO2 content of trade, which accounts for intermediate inputs, both domestic and imported. The structure of our new panel database of...

The debate on trade wars and currency wars has re-emerged since the Great recession of 2009. We study the two forms of non-cooperative policies within a single framework. First, we compare the elasticity of trade flows to import tariffs and to the real exchange rate, based on product level data...

Trade costs are often cited as an important determinant of the volume of trade. This paper provides enough evidence to ascertain that today's trade issues in Northeast Asia go beyond the traditional mechanisms of tariffs, and include "behind-the-border" issues. By estimating a modified gravity...