We analyze two main theories of international trade, the Heckscher-Ohlin theory and the Increasing Returns trade theory, by examining whether they can account for the empirical success of the so-called Gravity Equation. Since versions of both models can generate this prediction, we tackle the...

Examining the accuracy of the monopolistic competition theory's predictions for import volumes, we assess whether this theory accounts for the empirical success of the gravity equation. Since certain factor-endowment based theories have the same prediction for import volumes, we employ...

Re-sampling techniques and theoretically-motivated extraneous information are used to revisit Hummels and Levinsohn's (1995) analysis of the testable implication of the monopolistic competition trade theory for bilateral trade volumes. Confronting this implication with data from over...

We examine whether two important theories of trade, the Heckscher-Ohlin theory and the increasing returns theory, can account for the empirical success of the so-called gravity equation. Since versions of both theories can predict this equation, we tackle the model identification problem by...

We analyze two main theories of international trade, the Heckscher-Ohlin theory and the Increasing Returns trade theory, by examining whether they can account for the empirical success of the so-called Gravity Equation. Since versions of both models can generate this prediction, we tackle the...