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Trade costs are crucial in new economic geography (NEG) models. The unavailability of actual trade costs data requires the approximation of trade costs. Most NEG studies do not deal with the ramifications of the particular trade costs specification used. This paper shows that the specification...
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estimates of a gravity model of bilateral trade, which covers 208 countries for the period 1948-2006. For our study we use …
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measures are instrumented based on constructed trade shares and trade costs fitted from a gravity panel model of bilateral …
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