Aggregravity: Estimating Gravity Models from Aggregate Data

Badinger, Harald and Crespo Cuaresma, Jesus (2014) Aggregravity: Estimating Gravity Models from Aggregate Data. Department of Economics Working Paper Series, 183. WU Vienna University of Economics and Business, Vienna.


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This paper considers alternative methods to estimate econometric models based on bilateral data when only aggregate information on the dependent variable is available. Such methods can be used to obtain an indication of the sign and magnitude of bilateral model parameters and, more importantly, to decompose aggregate into bilateral data, which can then be used as proxy variables in further empirical analysis. We perform a Monte Carlo study and carry out a simple real world application using intra-EU trade and capital flows, showing that the methods considered work reasonably well and are worthwhile being considered in the absence of bilateral data. (authors' abstract)

Item Type: Paper
Keywords: Aggregation / gravity equations
Classification Codes: JEL C13, F14, F17
Divisions: Departments > Volkswirtschaft
Depositing User: Claudia Tering-Raunig
Date Deposited: 18 Sep 2014 08:04
Last Modified: 22 Oct 2019 00:41


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