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Some Stylized Facts about International Trade Flows
Author(s) -
Harris Mark N.,
Kónya László,
Mátyás László
Publication year - 2012
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/j.1467-9396.2012.01054.x
Subject(s) - stylized fact , economics , margin (machine learning) , econometrics , reciprocal , bilateral trade , panel data , international trade , macroeconomics , computer science , linguistics , philosophy , machine learning , law , political science , china
Since the mid‐1990s there has been a proliferation of empirical models in the trade literature. Focus has ranged from the effect of particular explanatory variables to improved econometric techniques. However, there appears to be a lack of analyses on large international trade datasets aiming at describing the “stylized facts” of observed bilateral trade flows. Uncovering them is crucial as any empirical econometric model should reflect the basic properties of the data generating process. On the basis of a large panel dataset this paper finds that bilateral trade, despite being often unbalanced, tends to be reciprocal and persistent, and that the extensive margin of trade must not be disregarded. Moreover, bilateral trade flows are probably best modeled as a mixed panel of stationary and non‐stationary processes. The stationary vs non‐stationary separation of these flows, although not random, does not appear to be related to any common characteristics of the trading partners.