Year: 2014
Type: book-chapter
Abstract: World trade evolves at two margins. Where a bilateral trading relationship already exists it may increase through time (intensive margin). But trade may also increase if a trading bilateral relationship is newly established between countries that have not traded with each other in the past (extensive margin). We provide an empirical dissection of post-World-War-II growth in manufacturing world trade along these two margins. We propose a “corner-solutions-version” of the gravity model to explain movements on both margins. A Tobit estimation of this model resolves the so-called “distance-puzzle”. It also finds more convincing evidence than recent literature that WTO-membership enhances trade.
Authors: Gabriel J Felbermayr, Wilhelm Kohler
Institution: University of Tübingen
Language: English
Topic: Global trade and economics
Domain: Social Sciences
Open Access status: green
Funder: Austrian Science Fund
OpenAlex ID: W2603967973