Burger, M.J.; Oort, F.G. van; Linders, G.J.M. - Erasmus Research Institute of Management (ERIM), ERIM … - 2009
Conventional studies of bilateral trade patterns specify a log-normal gravity equation for empirical estimation. However, the log-normal gravity equation suffers from three problems: the bias created by the logarithmic transformation, the failure of the homoscedasticity assumption, and the way...