Yoto V. Yotov

Dynamic gravity: endogenous country size and asset accumulation

Numerous gravity applications have resorted to panel data econometric techniques over the past decade. However, with the theory of gravity being so far only static, these estimations lack solid structural dynamic foundations. As a consequence, a consensus on a unified dynamic gravity estimation approach is yet to be reached. In this paper, (i) we build the theoretical foundations for a dynamic gravity model, (ii) we provide guidance for gravity‐type estimations with panel data and we consider applications, and (iii) we calibrate and simulate our model to compare its properties with those of the standard, static gravity setup. (De nombreuses applications du modele de gravite ont eu recours a des techniques econometriques de donnees de panel au cours de la derniere decennie. Cependant, la theorie de la gravite demeurant statique pour le moment, ces estimations manquent de fondements structurels dynamiques solides. En consequence, on n’a pas fait consensus sur une approche unifiee a l’estimation de modeles de gravite dynamique. Dans ce memoire, (i) on construit les fondements theoriques d’un modele de gravite dynamique; (ii) on suggere uen facon de proceder pour l’estimation de modeles de gravitea l’aide de donnees de panel, et on examine certaines applications; et (iii) on calibre notre modele et on le soumet a des simulations pour comparer ses proprietes avec celles obtenues au moyen du modele statique standard.)

How Much Does Geography Deflect Services Trade? Canadian Answers

We estimate geographic barriers to trade in nine service categories for Canadas provinces from 1997 to 2007 with novel high‐quality bilateral provincial trade data. The border directly reduces average provincial trade with the United States relative to interprovincial trade to 2.4% of its borderless level. Incorporating multilateral resistance reduces foreign trade relative to interprovincial to 0.1% of its frictionless potential. Geography reduces services trade some seven times more than goods trade overall. Surprisingly, intraprovincial (local) trade in services and goods is equally deflected upward, implying that the border increases interprovincial trade much more in services than goods.

Dynamic Gravity: Endogenous Country Size and Asset Accumulation (Gravité Dynamique: Le Cas Où La Taille Du Pays Et L’Accumulation D’Actifs Sont Endogènes)

Numerous gravity applications have resorted to panel data econometric techniques over the past decade. However, with the theory of gravity being so far only static, these estimations lack solid structural dynamic foundations. As a consequence, a consensus on a unified dynamic gravity estimation approach is yet to be reached. In this paper, (i) we build the theoretical foundations for a dynamic gravity model, (ii) we provide guidance for gravity‐type estimations with panel data and we consider applications, and (iii) we calibrate and simulate our model to compare its properties with those of the standard, static gravity setup. (De nombreuses applications du modele de gravite ont eu recours a des techniques econometriques de donnees de panel au cours de la derniere decennie. Cependant, la theorie de la gravite demeurant statique pour le moment, ces estimations manquent de fondements structurels dynamiques solides. En consequence, on n’a pas fait consensus sur une approche unifiee a l’estimation de modeles de gravite dynamique. Dans ce memoire, (i) on construit les fondements theoriques d’un modele de gravite dynamique; (ii) on suggere uen facon de proceder pour l’estimation de modeles de gravitea l’aide de donnees de panel, et on examine certaines applications; et (iii) on calibre notre modele et on le soumet a des simulations pour comparer ses proprietes avec celles obtenues au moyen du modele statique standard.)

Trade-Induced Unemployment: How Much Do We Care?

It is a common perception that a government, especially in the face of elections, is particularly sensitive to the presence of trade-induced unemployment. In this paper, I ask: how much weight does the incumbent politician actually attach to unemployment resulting from trade? To answer, I build a model that captures governments sympathy to trade-affected workers and allows me to decompose the channels through which trade-induced unemployment affects the level of sectoral protection chosen by a politically-driven incumbent official. I provide empirical evidence that the US government is very sensitive to the presence and the magnitude of trade-induced unemployment. Specifically, I estimate the weight that the office holder attaches to the welfare of trade-affected workers to be positive, significant, and four times larger than the weight on the welfare of those who are not affected by trade.

TRADE ADJUSTMENT, POLITICAL PRESSURE, AND TRADE PROTECTION PATTERNS

This paper introduces trade adjustment considerations as active determinants of trade policy. Using novel U.S. data sets, I show that, despite their small monetary value, trade‐induced unemployment and trade‐adjustment costs can incite an incumbent politician to grant protection to an unorganized industry, even in the presence of political pressure by organized sectors. This finding complements the theoretical predictions from Grossman and Helpman (American Economic Review, 84, 1994, 833–50) who argue that the government should protect organized industries but should subsidize imports in unorganized sectors.

Gravity, distance, and international trade

We review and interpret the main theoretical developments in the gravity literature from its very early, a-theoretical applications to the latest structural contributions. We also discuss challenges and implement methods to estimate empirical gravity equations. We finish with a presentation and examples of numerical simulations with the structural gravity model. Throughout the analysis we attempt to emphasize the links and importance of transportation costs for the trade literature and we outline avenues where we believe interdisciplinary contributions between the international trade and transportation economics fields will be most valuable.

GEPPML: General equilibrium analysis with PPML

We develop a simple procedure for general equilibrium comparative static analysis of gravity models. Non‐linear solvers are replaced by (constrained) regressions using theoretical properties of the Poisson pseudo‐maximum‐likelihood estimator. Our GEPPML procedure can readily be implemented in any software capable of estimating constrained Poisson models. The procedure accommodates calibrated as well as estimated trade costs while using the estimation power of structural gravity to generate GE comparative statics. Using GEPPML, we quantify the effects of a hypothetical removal of all international borders while preserving the impact of geography on trade. We find that trade liberalisation has reaped at most half the potential world gains from trade in 2002 manufacturing. A complementary counterfactual experiment simulates the removal of the border between Canada and US, thus contributing to the famous “border puzzle” literature in a multicountry setting.