at Google ScholarTitle data
Larch, Mario ; Wanner, Joschka ; Yotov, Yoto V. ; Zylkin, Thomas:
Currency Unions and Trade : a PPML Re-assessment with High-Dimensional Fixed Effects.
In: Oxford Bulletin of Economics and Statistics.
Vol. 81
(2019)
Issue 3
.
- pp. 487-510.
ISSN 1468-0084
DOI: https://doi.org/10.1111/obes.12283
Abstract in another language
Recent work on the effects of currency unions (CUs) on trade stresses the importance of using many countries and years in order to obtain reliable estimates. However, for large samples, computational issues associated with the three-way (exporter-time, importer- time, and country pair) fixed effects currently recommended in the gravity literature have heretofore limited the choice of estimator, leaving an important methodological gap. To address this gap, we introduce an iterative poisson pseudo-maximum likelihood (PPML) estimation procedure that facilitates the inclusion of these fixed effects for large data sets and also allows for correlated errors across countries and time. When applied to a compre- hensive sample with more than 200 countries trading over 65 years, these innovations flip the conclusions of an otherwise rigorously specified linear model. Most importantly, our estimates for both the overall CU effect and the Euro effect specifically are economically small and statistically insignificant. We also document that linear and PPML estimates of the Euro effect increasingly diverge as the sample size grows.
Further data
| Item Type: | Article in a journal |
|---|---|
| Refereed: | Yes |
| Subject classification: | C13; C23; C15; F14; F15; F33 |
| Institutions of the University: | Faculties > Faculty of Law, Business and Economics > Department of Economics > Chair Economics VI: Empirical Economic Research > Chair Economics VI: Empirical Economic Research - Univ.-Prof. Dr. Mario Larch Faculties Faculties > Faculty of Law, Business and Economics Faculties > Faculty of Law, Business and Economics > Department of Economics Faculties > Faculty of Law, Business and Economics > Department of Economics > Chair Economics VI: Empirical Economic Research |
| Result of work at the UBT: | Yes |
| DDC Subjects: | 300 Social sciences > 330 Economics |
| Date Deposited: | 18 Apr 2019 07:03 |
| Last Modified: | 18 Apr 2019 07:03 |
| URI: | https://eref.uni-bayreuth.de/id/eprint/48700 |