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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...
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members was already high. In OLS estimation, this would cause endogeneity bias. The present paper employs both fixed effects … robust and again indicate strong self-selection bias. Evaluated against the control groups, treatment effects in the 1930s …
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