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Title: Estimating Trade Equations from Aggregate Bilateral Data

Author(s): Tamim Bayoumi

Publication Date: September 1998

Keyword(s): Panel Data and Trade Elasticities

Programme Area(s): International Trade and Regional Economics

Abstract: Bilateral data on 420 merchandise trade flows between 21 industrial countries are used to estimate standard trade equations. The data set of over 11,000 observations allows the underlying elasticities to be estimated with considerable precision. Remarkably, a single specification appears to explain behaviour across these countries in spite of the large number of individual flows analysed. The results indicate a powerful long-run effect from supply on exports. Also, the real exchange rate elasticity depends upon the behaviour of third country exchange rates, there is evidence of pricing to market and of a J-curve.

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Bibliographic Reference

Bayoumi, T. 1998. 'Estimating Trade Equations from Aggregate Bilateral Data'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=1970