Regional integration and trade: a panel cointegration approach to estimating the gravity model

Stack, M.M. ORCID: 0000-0002-9213-7607 and Pentecost, E.J., 2011. Regional integration and trade: a panel cointegration approach to estimating the gravity model. Journal of International Trade and Economic Development, 20, pp. 53-65.

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Abstract

Using a panel data set of bilateral export flows from 12 EU countries to 20 OECD tradingpartners over the period 1992-2003, a panel cointegration approach to estimating thegravity model is adopted to test for the significance of European regional integration. Acomparison of the results indicates that a positive and significant coefficient estimate ofthe EU dummy variable is found for both the pooled OLS (POLS) estimator and thedynamic OLS (DOLS) estimator. The results, however, diverge once fixed effects areadmitted into the model. The least squares dummy variable (LSDV) estimator suggests asmall positive effect of EU integration on trade. In contrast, the dynamic LSDV(DLSDV) estimator indicates that regional integration has a larger beneficial effect ontrade. The results highlight the fundamental importance of properly accounting forendogeneity when evaluating trade policy effects.

Item Type:	Journal article
Publication Title:	Journal of International Trade and Economic Development
Creators:	Stack, M.M. and Pentecost, E.J.
Publisher:	Taylor & Francis (Routledge)
Date:	2011
Volume:	20
Identifiers:	Number Type 10.1080/09638199.2011.538184 DOI
Rights:	This is an Author's Original Manuscript of an article whose final and definitive form, the Version of Record, has been published in the Journal of International Trade and Economic Development, 2011, copyright Taylor & Francis, available online at: http://www.tandfonline.com/10.1080/09638199.2011.538184
Divisions:	Schools > Nottingham Business School
Record created by:	EPrints Services
Date Added:	09 Oct 2015 10:42
Last Modified:	09 Jun 2017 13:36
URI:	https://irep.ntu.ac.uk/id/eprint/16854

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