Intra-European Trade of Manufacturing Goods: An Extension of the Gravity Model

Authors : Mark VANCAUTEREN, Daniel WEİSERBS

Pages : 1-24

View : 13 | Download : 13

Publication Date : 2011-04-01

Article Type : Research Paper

Abstract :In this paper, we propose and test several extensions of the standard gravity model. This yields a specification that allows for insert ignore into journalissuearticles values(i); a more flexible income response; insert ignore into journalissuearticles values(ii); a competitiveness effect with a general and a specific component; and insert ignore into journalissuearticles values(iii); an alternative and consistent measure of remoteness. Those extensions were found to be significant factors to explain intra-EU trade. Next, we analyze the effect of EU harmonization of technical regulations on domestic and intra-EU trade. We find, at different levels of aggregation of the manufacturing sector, that harmonization of regulations has contributed to more intra-EU trade but, apparently, did not affect the so called border effect.
Keywords : Trade, EU Countries, Gravity Equation, Border Effects