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Trade costs, trade balances and current accounts : an application of gravity to multilateral trade ; presented at CESifo Area Conference on Macro, Money & International Finance, Fe...

Fazio, Giorgio; MacDonald, Ronald; Mélitz, Jacques - 2005

In this paper we test the well-known hypothesis of Obstfeld and Rogoff (2000) that trade costs are the key to explaining the so-called Feldstein-Horioka puzzle. Using a gravity framework in an intertemporal context, we provide strong support for the hypothesis and we reconcile our results with...

Persistent link: https://www.econbiz.de/10003144697

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