Estimation of the Gravity Equation of Bilateral Trade in the Presence of Zero Flows

The gravity model is the workhorse model to describe and explain variation in bilateral trade empirically. Consistent with both Heckscher-Ohlin models and models of imperfect competition and trade, this versatile model has proven to be very successful, explaining a large part of the variance in trade flows. However, the loglinear model cannot straightforwardly account for the occurrence of zero-valued trade flows between pairs of countries. This paper investigates the various approaches suggested to deal with zero flows. Apart from the option to omit the zero flows from the sample, various extensions of Tobit estimation, truncated regression, probit regression and substitutions for zero flows have been suggested. We argue that the choice of method should be based on both economic and econometric considerations. The sample selection model appears to fit both considerations best. Moreover, we show that the choice of method may matter greatly for the results, especially if the fraction of zero flows in the sample is large. In the end, the results surprisingly suggest that the simplest solution, to omit zero flows from the sample, often leads to acceptable results, although the sample selection model is preferred theoretically and econometrically.

Linking Trade and Transport Statistics: the Dutch Case

International trade flows are important for a trading nation such as the Netherlands. They are an important source of income, value added, and welfare. Trade flows are strongly related to transport flows of goods to and from a country. However, not all international transport flows through a country are registered as merchandize trade flows. For example, transit flows of goods are not recorded in international merchandize trade statistics. Such flows can just as well serve as a basis for value added, though. For example, goods transferred in Rotterdam harbour and transported and distributed by Dutch logistics firms create a basis for value added in services trade. Moreover, transport flows of goods entail costs as well, such as the costs of traffic congestion and environmental pollution. Therefore, it is of interest to have good information on the value and quantities of goods transported through countries, and the modes of transport used for various types of flows. For this purpose, we need integrated statistics on trade flows and transport flows in goods. To be able to match trade and transit flows with transport statistics, complete and plausible information on mode of transport and gross weight is needed. This paper describes the scope and coverage of trade statistics in comparison to transport statistics for the Netherlands. We use transport statistics to allocate the plausible mode of transport to trade and transit flows. Creating an integrated view on trade and transport flows in goods, the paper intends to contribute to an improved understanding of the impact of merchandize trade and transit flows on the economy, both in terms of domestic value added and in terms of potential social costs related to congestion and the emission of pollutants.

Intangible Barriers to Trade: The Impact of Institutions, Culture and Distance on Patterns of Trade

Nijkamp, P. [Promotor]Rietveld, P. [Promotor]Groot, H.L.F. de [Copromotor

Cultural and institutional determinants of bilateral trade flows

Contains fulltext : 47079.pdf (publisher's version ) (Open Access)28 p

Compact polymer components for an integrated add-drop multiplexer

A phasar and a digital thermo optic switch have been designed and processed in a high index contrast polymer technology. Both devices are small enough to fabricate two integrated add-drop multiplexers on one 4 inch wafe