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Is the Border Effect an Artefact of Geographical Aggregation?
Author(s) -
LlanoVerduras Carlos,
Mido Asier,
RequenaSilvente Francisco
Publication year - 2011
Publication title -
the world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.594
H-Index - 68
eISSN - 1467-9701
pISSN - 0378-5920
DOI - 10.1111/j.1467-9701.2011.01398.x
Subject(s) - border effect , grid , economics , econometrics , unit (ring theory) , measure (data warehouse) , economic geography , geography , geodesy , computer science , mathematics , database , mathematics education
The existence of a large border effect is considered as one of the main puzzles of international macroeconomics. We show that the border effect is, to a large extent, an artefact of geographical concentration. To do so, we combine international flows with intra‐national flows data characterised by a high geographical grid. At this fine grid, intra‐national flows are highly localised and dropping sharply with distance. The use of a small geographical unit of reference to measure intra‐national bilateral trade flows allows to estimating correctly the negative impact of distance on shipments. When we use sector disaggregated export flows of 50 Spanish provinces in years 2000 and 2005 split into inter‐provincial and inter‐national flows, we find that the border effect is reduced substantially and even becomes statistically not different from zero in some estimations.