Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/248977 
Year of Publication: 
2021
Series/Report no.: 
CESifo Working Paper No. 9432
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We propose new methods to identify the full impact of country-specific characteristics on bilateral trade flows within the framework of ‘the new quantitative trade model.’ We complement theory with a simple two-stage estimating procedure, and offer a proof of concept by quantifying the impact of country-specific R&D expenditure on trade. Results suggest a positive relationship overall, but a larger impact on international (versus domestic) trade. Further, our methodology allows us to recover trade elasticity estimates without the need for price/tariff data. Bringing this to the sectoral level, we obtain estimates of the trade elasticity for manufacturing, services, and tradable versus non-tradable sectors.
Subjects: 
structural gravity
country-specific trade costs
trade elasticity
elasticity of substitution
R&D and trade
JEL: 
F10
F14
F16
Document Type: 
Working Paper
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