How do trade costs affect international trade? This paper offers a new approach. We rely on a flexible gravity equation that predicts variable trade cost elasticities, both across and within country pairs. We apply this framework to the effect of currency unions on international trade. While we...

For the estimation of structural gravity models using PPML with countrypair, exportertime and importer-time effects it proves useful to exploit the equilibrium restrictions imposed by the system of multilateral resistances. This yields an iterative projection based PPML estimator that is...

This contribution takes a new look at the gravity equation model in relation to foreign direct investment (FDI) of leading industrialized countries which presents a useful basis for assessing certain potential impacts arising from BREXIT—the envisaged leaving of the EU by the United Kingdom....

Economic determinants of economic integration agreements (EIAs) have received ample attention in the economic literature. Political motivations for such agreements have been mostly studied as functions of domestic politics or in the context of conflict. In this paper I suggest a different...