Gravity Models of the Intra-EU Trade: Application of the Hausman-Taylor Estimation in Heterogeneous Panels with Common Time-specific Factors

In this paper we follow recent developments of panel data studies and explicitly allow for the existence of unobserved common time-specific factors where their individual responses are also allowed to be heterogeneous across cross section units. In the context of this extended panel data framework we generalize the Hausman-Taylor estimation methodology and develop the associated econometric theory. We apply our proposed estimation technique along with the conventional panel data approaches to a comprehensive analysis of the gravity equation of bilateral trade flows amongst the 15 European countries over 1960-2001. Empirical results clearly demonstrate that our proposed approach fits the data reasonably well and provides much more sensible results than the conventional approach based on the fixed time dummies. These findings may highlight the importance of allowing for a certain degree of cross section dependence through unobserved heterogeneous time specific common effects, otherwise the resulting estimates would be severely biased.Gravity Models of Trade, Heterogeneous Panel Data, Hausman-Taylor Estimation, Time-specific Common Factors, Intra-EU Trade.

Why gravity is not an entropic force

The remarkable connections between gravity and thermodynamics seem to imply that gravity is not fundamental but emergent, and in particular, as Verlinde suggested, gravity is probably an entropic force. In this paper, we will argue that the idea of gravity as an entropic force is debatable. It is shown that there is no convincing analogy between gravity and entropic force in Verlinde’s example. Neither holographic screen nor test particle satisfies all requirements for the existence of entropic force in a thermodynamics system. As a result, there is no entropic force in the gravity system. Furthermore, we show that the entropy increase of the screen is not caused by its statistical tendency to increase entropy as required by the existence of entropic force, but in fact caused by gravity. Therefore, Verlinde’s argument for the entropic origin of gravity is problematic. In addition, we argue that the existence of a minimum size of spacetime, together with the Heisenberg uncertainty principle in quantum theory, may imply the fundamental existence of gravity as a geometric property of spacetime. This provides a further support for the conclusion that gravity is not an entropic force

Quantum Gravity: Has Spacetime Quantum Properties?

The incompatibility between GR and QM is generally seen as a sufficient motivation for the development of a theory of Quantum Gravity. If - so a typical argumentation - QM gives a universally valid basis for the description of all natural systems, then the gravitational field should have quantum properties. Together with the arguments against semi-classical theories of gravity, this leads to a strategy which takes a quantization of GR as the natural avenue to Quantum Gravity. And a quantization of the gravitational field would in some sense correspond to a quantization of geometry. Spacetime would have quantum properties. But, this strategy will only be successful, if gravity is a fundamental interaction. - What, if gravity is instead an intrinsically classical phenomenon? Then, if QM is nevertheless fundamentally valid, gravity can not be a fundamental interaction. An intrinsically classical gravity in a quantum world would have to be an emergent, induced or residual, macroscopic effect, caused by other interactions. The gravitational field (as well as spacetime) would not have any quantum properties. A quantization of GR would lead to artifacts without any relation to nature. The serious problems of all approaches to Quantum Gravity that start from a direct quantization of GR or try to capture the quantum properties of gravity in form of a 'graviton' dynamics - together with the, meanwhile, rich spectrum of approaches to an emergent gravity and/or spacetime - make this latter option more and more interesting for the development of a theory of Quantum Gravity. The most advanced emergent gravity (and spacetime) scenarios are of an information-theoretical, quantum-computational type.Comment: 31 page

On Classical Equivalence Between Noncritical and Einstein Gravity : The AdS/CFT Perspectives

We find that noncritical gravity, a special class of higher derivative gravity, is classically equivalent to Einstein gravity at the full nonlinear level. We obtain the viscosity-to-entropy ratio and the second order transport coefficients of the dual fluid of noncritical gravity to all orders in the coupling of higher derivative terms. We also compute the holographic entanglement entropy in the dual CFT of noncritical gravity. All these results confirm the nonlinear equivalence between noncritical gravity and Einstein gravity at the classical level.Comment: 19 pages, no figure