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Aggregation and the Gravity Equation

Author(s): Redding, Stephen J.; Weinstein, David E.

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dc.contributor.authorRedding, Stephen J.-
dc.contributor.authorWeinstein, David E.-
dc.date.accessioned2020-01-23T22:06:42Z-
dc.date.available2020-01-23T22:06:42Z-
dc.date.issued2019-05en_US
dc.identifier.citationRedding, Stephen J, Weinstein, David E. (2019). Aggregation and the Gravity Equation. AEA PAPERS AND PROCEEDINGS, 109 (450 - 455). doi:10.1257/pandp.20191006en_US
dc.identifier.issn2574-0768-
dc.identifier.urihttp://arks.princeton.edu/ark:/88435/pr1j18x-
dc.description.abstractOne of the most successful empirical relationships in international trade is the gravity equation. A key decision for researchers in estimating this relationship is the level of aggregation, since the gravity equation is log linear, whereas aggregation involves summing the level rather than the log of trade. In this paper, we derive a Jensen's inequality correction term for nested constant elasticity of substitution preferences, such that a log-linear gravity equation holds exactly for each nest. We provide evidence that sectoral composition is quantitatively relevant for the aggregate effect of distance on international trade, particularly for more disaggregated definitions of sectors.en_US
dc.format.extent450 - 455en_US
dc.language.isoenen_US
dc.relation.ispartofAEA PAPERS AND PROCEEDINGSen_US
dc.rightsFinal published version. Article is made available in OAR by the publisher's permission or policy.en_US
dc.titleAggregation and the Gravity Equationen_US
dc.typeJournal Articleen_US
dc.identifier.doidoi:10.1257/pandp.20191006-
dc.identifier.eissn2574-0776-
pu.type.symplectichttp://www.symplectic.co.uk/publications/atom-terms/1.0/journal-articleen_US

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