A large literature on border effects in the wake of McCallum (1995) documents the massive impact of borders on trade. However, all these studies suffer from an identification problem. Border effects are usually identified from cross-sectional variation alone. We do not know how trade would...

This article deals with econometric developments for the estimation of gravity model, which allow to get convergent parameter estimates even when a correlation exists between the explanatory variables and the specific unobservable characteristics of each individual. We implement panel data...