Do Borders Really Slash Trade? A Meta-Analysis

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract: National borders reduce trade, but most estimates of the border effect seem puzzlingly large. We show that major methodological innovations of the last decade combine to shrink the border effect to a one-third reduction in international trade flows worldwide. The bor-der effect varies across regions: it is substantial in emerging countries, but relatively small in OECD countries. For the computation we collect 1,271 estimates of the border effect reported in 61 studies, codify 32 aspects of study design that may influence the estimates, and use Bayesian model averaging to take into account model uncertainty in meta-analysis. Our results suggest that methods systematically affect the estimated border effects. Espe-cially important is the level of aggregation, measurement of internal and external distance, control for multilateral resistance, and treatment of zero trade flows. We find no evidence of publication bias. Terms of use: Documents in

The Euro's Trade Effect: A Meta‐analysis

“…However, this study does not find a significant difference between the values reported in the main part of the studies compared to the robustness checks and appendices. Furthermore, it seems that the “silver medal mistake” in estimation () does not affect the euro effect, which is the same conclusion Havránek and Iršová () finds for the border effect.…”

“…where is the i th semielasticity estimate of the euro effect from the j th study, is the reported standard error of this estimate, γ 0 is the mean semielasticity corrected for publication bias, β is the measure of the publication bias, and is a normal disturbance term. Havránek and Iršová () note that the FAT using Equation has low power if the true effect is close to zero and that the only source of publication bias is statistically significant. In the literature on the euro effect, publication bias is based on sign rather than significance since economic theory predicts a positive effect and because it is difficult to explain the negative effects of joining a monetary union.…”

“…These methods help us reveal the underlying effect of the euro on bilateral trade and allow us to consider which aspects of research lead to the observed variation in the results. Meta‐analysis was introduced to the field of economics by Stanley and Jarrell () and is now widely used in many areas; for example, recent analyses have been conducted in international economics (Havránek and Iršová, ) and productivity (Polák, ). This paper does not pioneer meta‐analytic methods but follows previous meta‐analyses focusing on currency unions and on the euro area.…”

“…BMA has been used in meta‐analysis, among others, Iršová and Havránek (), Havránek et al . (), Havránek and Iršová (), Havránek et al . (, b).…”

Firm Size and Stock Returns: A Quantitative Survey

“…The number of observations n used for estimating a particular coefficient is by definition correlated with the reported standard error but it is plausibly independent of the choice of the estimation technique. We use the reciprocal of the square root of the number of observations (Stanley, ; Zigraiova and Havranek, ; Havranek and Irsova, ; Hampl and Havranek, ) as an instrument.…”