Reportedly, firms often find it impossible to finance large and long-term projects despite positive net present values. Should governments step in and can their assistance be effective? This paper studies the case of public export credit guarantees in Germany. Covering the default risk of...

R&D subsidized loans ( tiexi daikuan ) is an effective market-driven solution to promote firms' R&D outputs, including patent applications and new product sales, in China. However, empirical examination on the effects of subsidized loans is insufficient. Using a panel data of manufacturing firms...

Political risk represents an important hidden transaction cost that reduces international trade. This paper investigates the claim that German public export credit guarantees (Hermes guarantees) mitigate this friction to trade flows and hence promote exports. We employ an empirical trade gravity...

Political risk represents an important hidden transaction cost that reduces international trade. This paper investigates the claim that German public export credit guarantees (Hermes guarantees) mitigate this friction to trade flows and hence promote exports. We employ an empirical trade gravity...

To study the potentially distortionary impact of divergent corporate income tax rates on international trade flows, we use an augmented empirical specification of the gravity model. Incorporating a corporate income tax rate trade barrier measure into a modified gravity model, we capture the...

The objective of this manuscript is to serve as a practical guide for estimations with the structural gravity model. After a brief review of the theoretical foundations, we summarize the main challenges with gravity estimations and we review the solutions to address those challenges. Then, we...

This paper examines the impacts of the Japan-Mexico EPA on bilateral trade by using two different types of information, trade statistics and the EPA utilization rate. Using trade data, we found that Japan’s exports of built-up cars, auto parts, base metals, electrical machinery, precision...

The issues of zero trade observations and the validity of the log linear transformation of the gravity equation have generated a number of debates in the literature with differing claims about the most suitable estimation technique. To produce unbiased and consistent estimates for policy making,...

A structural gravity model is used to estimate barriers to services trade across many sectors, countries and time. Since the disaggregated output data needed to flexibly infer border barriers are often missing for services, we derive a novel methodology for projecting output data. The empirical...