PLEASE POST
Seminar Notice
Statistical Laboratory
Iowa State University
DATE AND TIME: Monday, September 26, 2005, 4:10 p.m.
PLACE: 319 Snedecor
SPEAKER: Justin L. Tobias, Department of Economics, Iowa State
University
TITLE: Bayes and Gravity
ABSTRACT
This paper seeks to empirically extend the gravity model, which has been
widely used in economics to analyze the volume of trade between a pair of
countries. We explicitly model the incidence of numerous zeros in our
bilateral trade data by taking up the threshold tobit variant of the gravity
equation [Eaton and Tamura (1994)]. We generalize the basic threshold
tobit model by allowing for the inclusion country-specific effects into the
analysis and also show how one can explore the relationship between trade
volumes and a given covariate via a nonparametric approach. We use our
derived methodology to investigate the impact of a particular aspect of
institutions - the enforcement of contracts - on bilateral trade. We find
that contract enforcement matters in predicting trade volumes for all types of
goods, and that it matters most for the trade of differentiated goods.
This final empirical result supports the predictions of previous theoretical
work in the literature.
COFFEE: 3:45 p.m., 104 Snedecor Hall
Jeanette La Grange
Department of Statistics
102 Snedecor
Iowa State University
Ames, IA 50010-1210
515 294-3440 (office)
515 294-4040 (fax)