The Log of Gravity

Review of Economics and Statistics - Tập 88 Số 4 - Trang 641-658 - 2006
João Santos Silva1, Silvana Tenreyro2
1ISEG/Universidade Técnica de Lisboa and CEMAPRE
2London School of Economics, CEP, and CEPR

Tóm tắt

Abstract Although economists have long been aware of Jensen's inequality, many econometric applications have neglected an important implication of it: under heteroskedasticity, the parameters of log-linearized models estimated by OLS lead to biased estimates of the true elasticities. We explain why this problem arises and propose an appropriate estimator. Our criticism of conventional practices and the proposed solution extend to a broad range of applications where log-linearized equations are estimated. We develop the argument using one particular illustration, the gravity equation for trade. We find significant differences between estimates obtained with the proposed estimator and those obtained with the traditional method.

Từ khóa


Tài liệu tham khảo

Anderson J., 1979, American Economic Review, 69, 106

10.1257/000282803321455214

Boisso D., 1997, Journal of Economic Integration, 12, 456

10.1016/0022-1996(95)01383-3

10.1017/S0266466600012767

10.1006/jjie.1994.1025

10.1016/0022-1996(95)92754-P

10.1214/aoms/1177704156

10.1111/0008-4085.00082

10.1162/003355302753650292

10.2307/1909517

10.2307/1913472

10.1016/j.jinteco.2005.04.001

10.1016/0022-1996(93)90006-J

10.2307/1913643

10.1016/S0167-6296(01)00086-8

McCallum J., 1995, American Economic Review, 85, 615

10.1002/(SICI)1099-1255(199611)11:6<619::AID-JAE418>3.0.CO;2-1

10.2307/1910108

Ramsey J. B., 1969, Journal of the Royal Statistical Society B, 31, 350

10.2307/1911033

10.1111/1468-0327.00056

Tenreyro S., 2002, FRB Boston series working paper, 4

10.2307/1912934

10.1002/(SICI)1099-1255(199705)12:3<281::AID-JAE436>3.0.CO;2-1

10.1016/S0304-4076(98)00033-5

Thông tin
Thông tin xuất bản

Review of Economics and Statistics

Tập 88 Số 4

641-658

Thông tin tác giả