Premium
Non‐discriminatory Trade Policies in Panel Structural Gravity Models: Evidence from Monte Carlo Simulations
Author(s) -
Sellner Richard
Publication year - 2019
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/roie.12401
Subject(s) - estimator , monte carlo method , panel data , economics , econometrics , gravity model of trade , gravity equation , bilateral trade , mathematics , statistics , macroeconomics , political science , law , china
Abstract This paper provides Monte Carlo (MC) simulation evidence on the performance of methods used for identifying the effects of nondiscriminatory trade policy (NDTP) variables in panel structural gravity models. The benchmarked methods include a fixed effect (FE) estimator that utilizes data on intra national trade flows, the bonus‐vetus (BV) and the two‐stage fixed effect (FE‐2S) estimator. The results indicate that only the FE estimates are unbiased and consistent under very general assumptions of the data generating process. The favourable asymptotic properties of the FE estimator unfold as the number of period T increases.