Is the border effect an artefact of geographic aggregation?
Entity
UAM. Departamento de Análisis Económico, Teoría Económica e Historia EconómicaPublisher
Fundación de las Cajas de AhorrosDate
2010Serie/Num.
Fundación de las Cajas de Ahorro. Documentos de Trabajo 570/2010ISSN
1988-8767Subjects
Border effect; Distance; Interregional trade; International trade; Spanish provinces; EconomíaAbstract
The existence of a large border effect is considered as one of the main puzzles of
international macroeconomics. We show that the border effect is, to a large extent,
an artefact of geographic concentration. In order to do so we combine international
flows with intra-national flows data characterised by a high geographic grid. At this
fine grid, intra-national flows are highly localised and dropping sharply with distance.
The use of a small geographical unit of reference to measure intra-national bilateral
trade flows allows to estimating correctly the negative impact of distance on
shipments. When we use sector disaggregated export flows of 50 Spanish provinces
in years 2000 and 2005 split into inter-provincial and inter-national flows, we find that
the border effect is reduced substantially and even becomes statistically not different
from zero in some estimations.
Files in this item
Google Scholar:Llano Verduras, Carlos
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Minondo Uribe, Asier
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Requena Silvente, Francisco
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