Transfers in the gravity equation
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comunitat-uji-handle2:10234/8643
comunitat-uji-handle3:10234/8644
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INVESTIGACIONMetadata
Title
Transfers in the gravity equationDate
2021-03-23Publisher
WILEY, 111 RIVER ST, HOBOKEN 07030-5774, NJ USABibliographic citation
Kruse, Hendrik W; Martínez‐Zarzoso, Inmaculada. 2021. “Transfers in the Gravity Equation.” Canadian Journal of Economics, no. 0. https://doi.org/10.1111/caje.12500.Type
info:eu-repo/semantics/articlePublisher version
https://onlinelibrary.wiley.com/doi/10.1111/caje.12500Version
info:eu-repo/semantics/publishedVersionSubject
JEL subject
Abstract
This study integrates development aid into a theoretically founded structural gravity model that considers primary and secondary effects of aid as an income transfer and as a bilateral trade cost determinant. We ... [+]
This study integrates development aid into a theoretically founded structural gravity model that considers primary and secondary effects of aid as an income transfer and as a bilateral trade cost determinant. We identify the parameters of our model using a two-stage approach that includes a state-of-the-art Poisson pseudo-maximum likelihood gravity estimation for a sample of 132 countries over the period 1995 to 2012. The main findings indicate that bilateral aid only increases bilateral trade for countries that do not have a common language, a past colonial relationship or an RTA. On average, 1 USD of additional foreign aid from all donors increases recipients' net imports by around 0.36 USD. Our comparative statics indicate that donors experience a reduction in real consumption due to aid and recipients an increase. We also analyze the effect on third countries. The modelling framework also applies to the study of other transfers such as remittances. [-]
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Canadian journal of economics , 2021, (0)Funder Name
German Research Foundation (DFG) | Spanish Ministry of Economy and Competitiveness
Project code
ECO2017-83255-C3-3-P
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info:eu-repo/semantics/openAccess
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- ECO_Articles [696]
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