Cultural factors and especially common languages are well-known determinants of trade. By contrast, the knowledge of foreign languages was not explored in the literature so far. We combine traditional gravity models with data on fluency in the main languages used in EU and candidate countries....

The expansion of regionalism has spawned an extensive theoretical literature analysing the effects of Free Trade Agreements (FTAs) on trade flows. In this paper we focus on FTAs (also called European agreements) between the European Union (EU-15) and the Central and Eastern European countries...

This paper intends to combine two fields in the economic literature by examining empirically the FDI pattern – horizontal versus vertical – within the European Union and the relevance of trade integration as a potential determinant of investment flows over the period 1995-2009. We capture...

We address the trade effect of restrictive product standards on the margins of trade, by matching a detailed panel of French firm exports with a new database compiling the list of Sanitary and Phyto-Sanitary regulatory measures that have been raised as a concern in dedicated committees of the...

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 paper develops an open economy model with heterogeneous final goods producers who simultaneously choose whether to export their goods and whether to use imported intermediates. The model highlights mechanisms whereby import policies affect aggregate productivity, resource allocation, and...

We develop a new general equilibrium monopolistic competition model with variable demand elasticity, heterogeneous firms, and multiple asymmetric regions. Wages, productivity, consumption diversity, and markups across firms and markets are all endogenously determined and respond to trade...

This paper derives a micro-founded gravity equation in general equilibrium based on a translog demand system that allows for endogenous markups and rich substitution patterns across goods. In contrast to standard CES-based gravity equations, trade is more sensitive to trade costs if the...

This paper identifies a “border” effect in the absence of a border. The finding that trade between East- and West-Japan is 23.1 to 51.3 percent lower than trade within both country parts, is established despite the absence of an obvious east-west division due to historical borders, cultural...

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...