2019/01/01 by James P. LeSage, LeSage, James P., Manfréd M. Fischer +1
Economics, Econometrics and Finance · #Economic Growth and Productivity #Regional Economics and Spatial Analysis #Spatial and Panel Data Analysis
paper · pdf · doi:10.57938/ed212b35-bfb2-44dd-b494-8053d52cc7dd
openalex publication_date 2019/01/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/23
Past focus in the panel gravity literature has been on multidimensional fixed effects specifications <br/>in an effort to accommodate heterogeneity. After introducing conventional multidimensional fixed effects, we find evidence of cross-sectional dependence in <br/>flows. <br/>We propose a simultaneous dependence gravity model that allows for network dependence <br/>in flows, along with computationally efficient Markov Chain Monte Carlo estimation methods <br/>that produce a Monte Carlo integration estimate of log-marginal likelihood useful for model <br/>comparison. Application of the model to a panel of trade <br/>flows points to network spillover <br/>effects, suggesting the presence of network dependence and biased estimates from conventional <br/>trade flow specifications. The most important sources of network dependence were found to <br/>be membership in trade organizations, historical colonial ties, common currency and spatial <br/>proximity of countries.