Journal Article
Controlling for heterogeneity in gravity models of trade and integration
Wall, Howard J.; Cheng, I-Hui (2005-01)
This paper compares various specifications of the gravity model of trade as nested versions of a general specification that uses bilateral country-pair fixed effects to control for heterogeneity. For each specification, we show that the atheoretical restrictions used to obtain them from the general model are not supported statistically. Because the gravity model has become the "workhorse" baseline model for estimating the effects of international integration, this has important empirical implications. In particular, we show that, unless heterogeneity is accounted for correctly, gravity ...
Review , Volume 87 , Issue Jan , Pages 49-63

Working Paper
Controlling for heterogeneity in gravity models of trade and integration
Wall, Howard J.; Cheng, I-Hui (2004)
This paper compares various specifications of the gravity model of trade as nested versions of a general specification that uses bilateral country-pair fixed effects to control for heterogeneity. For each specification, we show that the a theoretical restrictions to obtain them from the general model are not supported statistically. Because the gravity model has become the ?workhorse? baseline model for estimating the effects of international integration, this has important empirical implications. In particular, we show that, unless heterogeneity is accounted for correctly, gravity models can ...
Working Papers , Paper 1999-010