*SCOPUS*

*학술저널*

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*On the Problem of Endogenous Unobserved Effects in the Estimation of Gravity Models*

On the Problem of Endogenous Unobserved Effects in the Estimation of Gravity Models

- 세종대학교 경제통합연구소
- Journal of Economic Integration
- 제19권 제1호
- : SCOPUS, KCI등재
- 2004.03
- 182 - 191 (10 pages)

We propose to estimate gravity models by a Hausman and Taylor (1981) 2SLS error components approach. First, this allows to account for the possible correlation of some of the regressors with the unobserved effects, which has been ignored in previous research. Second and in contrast to the Within estimator, one obtains estimates for the time-invariant variables also in a framework with bilateral effects. We show that distance and country size are important sources of correlation. The properly estimated parameter of distance is about twice as high as its biased GLS counterpart and markedly higher than found by others.

Ⅰ. Introduction

Ⅱ. The Empirical Model: A Hausman and Taylor (1981) Approach

Ⅲ. Data and Estimation Results

Ⅳ. Conclusions