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Controlling for Heterogeneity in Gravity Models of Trade and Integration
2005
Review
been common to instead specify the augmented model using per capita income, which captures the same effects. 3 Whichever specification of the augmented model is used, the purpose is to allow for non-homothetic preferences in the importing country and to proxy for the capital/labor ratio in the exporting country (Bergstrand, 1989 ). The gravity model of trade has been used widely as a baseline model for estimating the impact of a variety of policy issues, including regional trading groups,
doi:10.20955/r.87.49-64
fatcat:vdlwpz5idjgghnbz6nnc24m3gm