Results

CEP discussion paper

Universities, new tasks, and the rise of services

Structural transformation from manufacturing to services varies sharply across US regions. We document that regions with universities, especially highly ranked research institutions, experience faster growth in high-skil...Read more...

CEP discussion paper

The fragility of the global trading system

We use a parsimonious gravity framework to simulate and compare five potential shocks to the global shipping system: closures of the Panama Canal, the Suez Canal, and the Strait of Malacca, and openings of the Northwest ...Read more...

CEP discussion paper

Sticky gravity

International trade flows show strong persistence over time. Standard static gravity models cannot rationalize this persistence and lack a micro-foundation for including lagged trade flows as a determinant of current tra...Read more...

Journal article

Journal of International Economics:

Networks in trade - evidence from the legacy of the Hanseatic league

We study trade networks following the decline of the Hanseatic League, using a novel trade data set that covers cities and captains in Northern Europe over 190 years. By the time of its dissolution in 1669, trade on form...Read more...

CEP discussion paper

Large-scale land acquisitions: Trees, trade and structural change

Large-scale land acquisitions are a key component of agricultural foreign direct investment. In 2023 alone, nearly 6% of the world's arable land was acquired globally. This paper examines their impact on agricultural pro...Read more...

Journal article

Review of Economics and Statistics:

Trade, gravity and aggregation

Gravity equations are an important tool in empirical international trade research. We study to what extent sector-level parameters can be recovered from aggregate gravity equations estimated via Poisson pseudo maximum li...Read more...

CEP discussion paper

Trade and the end of antiquity

What caused the end of antiquity, the shift of economic activity away from the Mediterranean towards northern Europe? We assemble a large database of coin flows between the 4th and 10th century and use it to document the...Read more...

CEP discussion paper

Gendered change: 150 years of transformation in US hours

Women's contribution to the economy has been markedly underestimated in predominantly agricultural societies, due to their widespread involvement in unpaid agricultural work. Combining data from the US Census and several...Read more...

Blog

Vox EU:

Urban-biased structural change

Economic activity in high-income countries has shifted towards services and away from manufacturing. But research remains scant on the patterns of structural change within countries across urban and rural areas. Using mi...Read more...

CEP discussion paper

The geography of structural transformation: effects on inequality and mobility

The interplay between structural transformation in the aggregate and local economies is key to understanding spatial inequality and worker mobility. This paper develops a dynamic overlapping generations model of economic...Read more...

Blog

Vox EU:

Structural change within versus across firms: evidence from the US

One feature of the US economy over the last five decades has been the transition away from manufacturing towards services. This column takes a firm-level view of structural change from 1977-2019 to study these sectoral d...Read more...

CEP discussion paper

Structural change within versus across firms: evidence from the United States

We document the role of intangible capital in manufacturing firms' substantial contribution to non-manufacturing employment growth from 1977-2019. Exploiting data on firms' "auxiliary" establishments, we develop a novel ...Read more...

Journal article

Journal of Political Economy:

Trade, structural transformation, and development: evidence from Argentina 1869-1914

We provide new theory and evidence on the role of external and internal integration in structural transformation and economic development, using Argentina's integration into the world economy in the late nineteenth centu...Read more...

Journal article

The Economic Journal:

Gravity and heterogeneous trade cost elasticities

How do trade costs affect international trade? This paper offers a new approach. We rely on a flexible gravity equation that predicts variable trade cost elasticities, both across and within country pairs. We apply this ...Read more...

Journal article

Oxford Economic Papers:

Economic geography aspects of the Panama Canal

This paper studies how the opening of the Panama Canal in 1914 changed counties? market potential and influenced the economic geography of the USA. We compute shipment effective distances with and without the canal from ...Read more...

CEP discussion paper

Trade persistence and trader identity - evidence from the demise of the Hanseatic League

How do trade networks persist following disruptions of political networks? We study different types of persistence following the decline of the Hanseatic League using a panel of 21,590 city-level trade flows over 190 yea...Read more...

Blog

VoxEU:

Quantifying the full impact of country-specific policies on trade flows

Rebecca Freeman, Mario Larch, Angelos Theodorakopoulos and Yoto Yotov propose a solution to issues measuring country-specific impact using structural gravity models - a popular way to analyse the impact of trade policie...Read more...

Journal article

International Economic Review:

Estimating border effects: the impact of spatial aggregation

Trade data are typically aggregated across space. In this article, we investigate the sensitivity of gravity estimation to spatial aggregation. We build a model in which micro regions are aggregated into macro regions. W...Read more...

CEP discussion paper

Pandemic shock and economic divergence: political economy before and after the black death

We document how the Black Death activated politics and led to economic divergence within Europe. Before the pandemic, economic development was similar in Eastern and Western German cities despite greater political fragme...Read more...

CEP discussion paper

Trade, gravity and aggregation

Gravity regressions are a common tool in the empirical international trade literature and serve an important function for many policy purposes. We study to what extent micro-level parameters can be recovered from gravity...Read more...

Journal article

Journal of Common Market Studies:

The effect on foreign direct investment of membership in the European Union

This article explores the impact of EU membership on foreign direct investment (FDI). It analyses empirically how the effects of such deep integration differ from other forms and investigates what drives these effects. U...Read more...

Journal article

Economics Letters:

Gravity model estimates of the spatial determinants of trade, migration, and trade-and-migration policies

Using a gravity model, we explore the effects of distance and borders on trade, migration, and trade-and-migration policies and document three key differences between trade and migration patterns in otherwise equivalent ...Read more...

Journal article

Journal of the European Economic Association:

Organizing global supply chains: input-output linkages and vertical integration

We study how the technological importance of inputs?measured by cost shares?is related to the decision to ?make? or ?buy? that input. Using detailed French international trade data and an instrumental variable approach b...Read more...

CEP discussion paper

Gravity with granularity

We evaluate the consequences of oligopolistic behavior for the estimation of gravity equations for trade flows. With oligopolistic competition, firm-level gravity equations based on a standard CES demand framework need t...Read more...

CEP Brexit analysis

Disunited Kingdom? Brexit, trade and Scottish independence

Scotland is a small, open economy that mostly trades with the rest of the UK. There is around six times more trade between Scotland and the rest of the UK than predicted by a standard gravity trade model. Scottish indepe...Read more...

CentrePiece article

Globalisation and pandemics: surprising interactions

Pandemics are only possible because of international travel. But perhaps surprisingly, in the absence of social distancing, a more globalised country will not necessarily suffer a worse outbreak. Pol Antras, Stephen Redd...Read more...

CEP discussion paper

Globalization and pandemics

We develop a model of human interaction to analyze the relationship between globalization and pandemics. Our framework provides joint microfoundations for the gravity equation for international trade and the Susceptible-...Read more...

CEP discussion paper

Gravity in international finance: evidence from fees on equity transactions

We shed light on the impact of institutional quality and information barriers on trade in financial services using a novel panel data set on revenue earned on domestic and cross-border equity securities underwriting tran...Read more...

Journal article

World Economy:

The not-so-generalised effects of the Generalized System of Preferences

We use an empirical gravity equation to study how non-reciprocal trade preferences (NRTPs), enacted mainly through the Generalized System of Preferences, affect the exports of the beneficiary nations. In line with existi...Read more...

Journal article

Asian Economic Policy Review:

Trade blocs and trade wars during the interwar period

What precisely were the causes and consequences of the trade wars in the 1930s? Were there perhaps deeper forces at work in reorienting global trade prior to the outbreak of World War II? And what lessons may this partic...Read more...

CEP discussion paper

Economic geography aspects of the Panama Canal

This paper studies how the opening of the Panama Canal in 1914 changed market access and influenced the economic geography of the United States. We compute shipment distances with and without the canal from each US count...Read more...

CEP discussion paper

Trade blocs and trade wars during the interwar period

What precisely were the causes and consequences of the trade wars in the 1930s? Were there perhaps deeper forces at work in reorienting global trade prior to the outbreak of World War II? And what lessons may this partic...Read more...

Journal article

Journal of International Economics:

Foreign expansion, competition and bank risk

Using a novel dataset on the 15 European banks classified as G-SIBs from 2005 to 2014, we find that the impact of foreign expansion on risk is always negative and significant for most individual and systemic risk metrics...Read more...

Journal article

Review of World Economics:

Are all trade agreements equal? The role of distance in shaping the effect of economic integration agreements on trade flows

How does geographic distance affect the impact of trade agreements on bilateral exports, and through what channels? This paper examines this questions in a gravity model context for different types of goods for 185 count...Read more...

CEP discussion paper

Aggregation and the gravity equation

One of the most successful empirical relationships in international trade is the gravity equation, which relates bilateral trade flows between an origin and destination to bilateral trade frictions, origin characteristic...Read more...

CEP discussion paper

The not-so-generalized effects of the generalized system of preferences

We use an empirical gravity equation approach to study how nonreciprocal trade preferences (NRTPs), enacted mainly through the Generalized System of Preferences, affect the exports of the beneficiary nations. In line wit...Read more...

Journal article

Journal of International Economics:

Market potential and global growth over the long twentieth century

We examine the evolution of market potential and its role in driving economic growth over the long twentieth century. Theoretically, we exploit a structural gravity model to derive a closed-form solution for a widely-use...Read more...

CEP discussion paper

Foreign expansion, competition and bank risk

Using a novel dataset on the 15 European banks classified as G-SIBs from 2005 to 2014, we find that the impact of foreign expansion on risk is always negative and significant for most individual and systemic risk metrics...Read more...

CEP discussion paper

Market potential and global growth over the long twentieth century

We examine the evolution of market potential and its role in driving economic growth over the long twentieth century. Theoretically, we exploit a structural gravity model to derive a closed-form solution for a widely-use...Read more...

CEP discussion paper

Currency unions, trade and heterogeneity

How do trade costs affect international trade? This paper offers a new approach. We rely on a flexible gravity equation that predicts variable trade cost elasticities, both across and within country pairs. We apply this ...Read more...

CEP discussion paper

Firm-to-firm connections in Colombian imports

The vast majority of world trade flows is between firms. Only recently has research in international trade started to emphasize the importance of the connections between exporters and importers both in aggregate trade fl...Read more...

CEP discussion paper

Economic integration, foreign investment and international trade: the effects of membership of the European Union

This paper investigates the importance of economic integration in simultaneously fostering foreign direct investment (FDI) and international trade. These have rarely been analyzed jointly using contemporary econometric m...Read more...

CEP discussion paper

Structural adjustments and international trade: theory and evidence from China

This paper studies how changes in factor endowment, technology, and trade costs jointly determine the structural adjustments, which are defined as changes in distributions of production and exports. We document the struc...Read more...

Journal article

American Economic Journal: Macroeconomics:

Gender gaps and the rise of the service economy

This paper investigates the role of the rise in services in the narrowing of gender gaps in hours and wages in recent decades. We highlight the between-industry component of differential gender trends for the United Stat...Read more...

CentrePiece article

In brief... How the rise of the service economy narrowed the gender gap

The historical growth in the service sector since the Second World War has created jobs for which women have a comparative advantage, according to analysis by Rachel Ngai and Barbara Petrongolo. Their research shows how ...Read more...

Journal article

Review of International Economics:

The geometry of the distance coefficient in gravity equations in international trade

Gravity equations in trade imply that trade flows are proportional to the size of a country and inversely proportional to distance. This paper develops the analogy of gravity in physics with gravity in trade and provides...Read more...

CEP discussion paper

Foreign direct investment and the relationship between the United Kingdom and the European Union

This paper investigates whether and to what extent foreign direct investment inflows into the United Kingdom are caused by its membership in the European Union (EU). It reports two main sets of econometric estimates: (a)...Read more...

Journal article

The Review of Economic Studies:

Estimating strategic models of international treaty formation

This article develops an empirical framework for analysing the timing of international treaties. A treaty is modelled as a dynamic game among governments that decide on participation in every period. The net benefit of t...Read more...

Journal article

Journal of International Economics:

The price of development: The Penn?Balassa?Samuelson effect revisited

The Penn?Balassa?Samuelson effect is the stylized fact about the positive correlation between cross-country price level and per-capita income. This paper provides evidence that the price?income relation is actually non-l...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Impact of Structural Reforms on Regional Growth: Distance to the Frontier Matters

This paper aims to understand the impact of nation-wide structural policies on the productivity growth of OECD regions. In particular we explore how this impact varies with the productivity gap of regions with their coun...Read more...

CEP discussion paper

Estimating border effects: the impact of spatial aggregation

Trade data are typically reported at the level of regions or countries and are therefore aggregates across space. In this paper, we investigate the sensitivity of standard gravity estimation to spatial aggregation. We bu...Read more...

SERC/Urban and Spatial Programme Discussion Paper

The Spatial Decay in Commuting Probabilities: Employment Potential vs. Commuting Gravity

We show that an employment potential capitalisation model, which establishes a spatial relationship between the price of land and the spatial distribution of employment through a transport matrix, produces estimates of t...Read more...

CentrePiece article

In brief... Oil: the impact on women's work

Stephan Maurer and Andrei Potlogea explore whether oil-dominated economies are naturally biased against women's labour market participation....Read more...

CentrePiece article

The path from cause to effect: mastering 'metrics

How should researchers interested in social and economic policy untangle cause and effect? A new book by Joshua Angrist and Jorn Steffen Pischke shows how the five core econometric tools -randomised trials, regression, ...Read more...

Journal article

Journal of International Economics:

Spatial exporters

In this paper, we provide causal evidence that firms serve new markets which are geographically close to their prior export destinations with a higher probability than standard gravity models predict. We quantify the imp...Read more...

CEP discussion paper

European integration and the gains from trade

This chapter discusses whether and how .new quantitative trade models.(NQTMs) can be fruitfully applied to quantify the welfare effects of trade liberalization, thus shedding light on the trade-related effects of further...Read more...

CEP discussion paper

Fueling the gender gap? Oil and women's labor and marriage market outcomes

This paper analyzes the effect of resource-based economic specialization on women's labor market outcomes. Using information on the location and discovery of major oil fields in the Southern United States coupled with a ...Read more...

CEP discussion paper

External integration, structural transformation and economic development: evidence from Argentina

This paper uses the natural experiment of Argentina?s integration into world markets in the late-nineteenth century to provide evidence on the role of internal geography in shaping the effects of external integration. We...Read more...

CentrePiece article

Outsourcing and the shift from manufacturing to services

Giuseppe Berlingieri looks at the structural transformation of the US economy over the past 60 years....Read more...

CEP discussion paper

Gender Gaps and the Rise of the Service Economy

This paper explains the narrowing of gender gaps in wages and market hours in recent decades by the growth of the service economy. We propose a model with three sectors: goods, services and home production. Women have a ...Read more...

CEP discussion paper

Outsourcing and the Rise in Services

This paper investigates the impact of outsourcing on sectoral reallocation in the U.S. over the period 1948-2002. Roughly 40% of the growth of the service sector comes from professional and business services. This is an ...Read more...

CEP discussion paper

Productivity As If Space Mattered: An Application to Factor Markets Across China

Optimal production decisions depend on local market characteristics. This paper develops a model to explain firm labor demand and firm density across regions. Firms vary in their technology to combine imperfectly substit...Read more...

CEP discussion paper

On the Measurement of Trade Costs: Direct vs. Indirect Approaches to Quantifying Standards and Technical Regulations

In this article, we review the literature on the measurement of trade costs in international trade with a special emphasis on nontariff measures and in particular on standards and technical regulations. We distinguish `d...Read more...

CEP discussion paper

Is the International Border Effect Larger than the Domestic Border Effect? Evidence from U.S. Trade

Many studies have found that international borders represent large barriers to trade. But how do international borders compare to domestic border barriers? We investigate international and domestic border barriers in a u...Read more...

CEP discussion paper

Gravity Redux: Measuring International Trade Costs with Panel Data

Barriers to international trade are known to be large but due to data limitations it is hard to measure them directly for a large number of countries over many years. To address this problem I derive a micro-founded meas...Read more...

CEP discussion paper

Spatial Exporters

In this paper, we provide causal evidence that firms serve new markets which are geographically close to their prior export destinations with a higher probability than standard gravity models predict. We quantify the imp...Read more...

CEE/Education and skills discussion paper

From Grants to Loans and Fees: The Demand for Post-Compulsory Education in England and Wales from 1955 to 2008

The UK has progressively moved from a Higher Education (HE) system which is funded at the tax payers? expense to one which is funded by individual participants (and their parents) by scrapping student grants, introducing...Read more...

SERC/Urban and Spatial Programme Discussion Paper

If We Build, Will They Pay? Predicting Property Price Effects of Transport Innovations

In this study I develop a partial equilibrium approach for the prediction of property price effects of transport network extensions. It combines a gravity-type labor market accessibility indicator with a transport decisi...Read more...

CEP discussion paper

International Trade Without CES: Estimating Translog Gravity

This paper derives a micro-founded gravity equation in general equilibrium based on a translog demand system that allows for endogenous markups and substitution patterns across goods. In contrast to standard CES-based gr...Read more...

CEP discussion paper

The Credibility Revolution in Empirical Economics: How Better Research Design is taking the Con out of Econometrics

This essay reviews progress in empirical economics since Leamer?s (1983) critique. Leamer highlighted the benefits of sensitivity analysis, a procedure in which researchers show how their results change with changes in s...Read more...

CEP discussion paper

Recovering the Sunk Costs of R&D: the Moulds Industry Case

Sunk costs for R&D are an important determinant of the level of innovation in the economy. In this paper I recover them using a Markov equilibrium framework. The contribution is twofold. First, a model of industry dynami...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Trade, Wages and Productivity

We develop a new general equilibrium model of monopolistic competition with heterogeneous firms, variable demand elasticity and multiple asymmetric regions, in which trade integration induces wage and productivity change...Read more...

CEP discussion paper

Trade, Wages and Productivity

We develop a new general equilibrium model of monopolistic competition with heterogeneous firms, variable demand elasticity and multiple asymmetric regions, in which trade integration induces wage and productivity change...Read more...

CEP discussion paper

Trading Partners and Trading Volumes: Implementing the Helpman-Melitz-Rubinstein Model Empirically

Helpman, Melitz, and Rubinstein (2008)?HMR?present a rich theoretical model to study the determinants of bilateral trade flows across countries. The model is then empirically implemented through a two-stage estimation pr...Read more...

CEP discussion paper

Further Simulation Evidence on the Performance of the Poisson Pseudo-Maximum Likelihood Estimator

We extend the simulation results given in Santos-Silva and Tenreyro (2006, `The Log of Gravity?, The Review of Economics and Statistics, 88, pp.641-658) by considering data generated as a finite mixture of gamma variates...Read more...

CEP discussion paper

On the Existence of the Maximum Likelihood Estimates for Poisson Regression

We note that the existence of the maximum likelihood estimates for Poisson regression depends on the data configuration. Because standard software does not check for this problem, the practitioner may be surprised to fin...Read more...

CEP discussion paper

International Trade Integration: A Disaggregated Approach

This paper investigates the sources and size of trade barriers at the industry level. We derive a micro-founded measure of industry-specific bilateral trade integration that has an in-built control for time-varying multi...Read more...

CEP discussion paper

Relative Factor Endowments and International Portfolio Choice

This paper presents a model of international portfolio choice based on cross-country differences in relative factor abundance. Countries have varying degrees of similarity in their factor endowment ratios, and are subjec...Read more...

CEP discussion paper

Productivity Growth, Knowledge Flows and Spillovers

This paper explores the role of knowledge flows and TFP growth by using direct survey data on knowledge flows linked to firm-level TFP growth data. Our knowledge flow data correspond to the kind of information flows ofte...Read more...

CEP discussion paper

Unemployment and Hours of Work: The North Atlantic Divide Revisited

I examine the dynamic evolutions of unemployment, hours of work and the service share since the war in the United States and Europe. The theoretical model brings together all three and emphasizes technological growth. Co...Read more...

CEP discussion paper

Trends in Hours and Economic Growth

We study long-run trends in market hours of work and employment shifts across economic sectors driven by uneven TFP growth in market and home production. We focus on the structural transformation between agriculture, man...Read more...

CEP discussion paper

The Log of Gravity

Although economists have long been aware of Jensen's inequality, many econometric applications have neglected an important implication of it: the standard practice of interpreting the parameters of log-linearized models ...Read more...

CEP discussion paper

Balanced Growth With Structural Change

We study a multi-sector model of growth with differences in TFP growth rates across sectors and derive sufficient conditions for the coexistence of a balanced aggregate growth path, with all aggregates growing at the sam...Read more...

CEP discussion paper

The Determinants Of Cross-Border Equity Flows

We apply a new approach to a new panel data set on bilateral gross cross-border equity flows between 14 countries, 1989-96. The remarkably good results have strong implications for theories of asset trade. We find that t...Read more...