Aggregravity: estimating gravity models from aggregate data |
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Authors: | Harald Badinger Jesus Crespo Cuaresma |
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Institution: | 1. Department of Economics, Vienna University of Economics and Business (WU), 1020 Vienna, Austria;2. Austrian Institute for Economic Research (WIFO), 1020 Vienna, Austriaharald.badinger@wu.ac.at;4. Austrian Institute for Economic Research (WIFO), 1020 Vienna, Austria;5. Wittgenstein Centre for Demography and Global Human Capital (WIC), 1020 Vienna, Austria;6. World Population Program, International Institute of Applied Systems Analysis (IIASA), Laxenburg, Austria |
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Abstract: | This article considers alternative methods to estimate econometric models based on bilateral data when only aggregate information on the dependent variable is available. Such methods can be used to obtain an indication of the sign and magnitude of bilateral model parameters and, more importantly, to decompose aggregate into bilateral data, which can then be used as proxy variables in further empirical analyses. We perform a Monte Carlo study and carry out a simple real world application using intra-EU trade and capital flows, showing that the methods considered work reasonably well and are worthwhile being considered in the absence of bilateral data. |
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Keywords: | aggregation gravity equations |
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