Exploring The Intensive Extensive Margins Of World Trade
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Exploring the Intensive and Extensive Margins of World Trade
Author | : Gabriel J. Felbermayr |
Publisher | : |
Total Pages | : 39 |
Release | : 2004 |
Genre | : |
ISBN | : |
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World trade evolves at two margins. Where a bilateral trading relationship already exists it may increase through time (intensive margin). But trade may also increase if a trading bilateral relationship is newly established between countries that have not traded with each other in the past (extensive margin). We provide an empirical dissection of post-World-War-II growth in manufacturing world trade along these two margins. We propose a corner-solutions-versionʺ of the gravity model to explain movements on both margins. A Tobit estimation of this model resolves the so-called distance-puzzleʺ. It also finds more convincing evidence than recent literature that WTO-membership enhances trade.
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