Trade in Services: Does Gravity Hold?

By Keith Walsh. Journal of World Trade, 2006

133 citations recorded by the source corpus.

This paper assesses the determinants of trade in services using a gravity model, with particular attention given to the role of barriers to services trade. Initially, the application of the gravity equation to services trade is examined. A variety of econometric estimators are tested and the Hausman-Taylor model is found to be the best estimator. The gravity model fits services trade flows in a similar manner to trade in goods. Wealth of countries and a common language are the most important determinants of services trade, distance is generally found to be insignificant. A variable measuring barriers to services trade is introduced into the gravity equation. Although the variable is only found to be weakly significant, a quantified set of tariff equivalents of those barriers is estimated.

Subfields: Economics and Econometrics, Finance, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/9bcaa79519689303738adf6630d2f9113f912b19

Citations in the corpus

• Estimations of Tariff Equivalents for the Services Sectors (2011, unknown): “This suggest an indirect approach (Park, 2002; Francois et al., 2005; Walsh, 2006), consisting of computing tariff equivalents and assessing protection by comparing actual trade in services against a benchmark.”
• Reciprocal Trade Agreements in Gravity Models: A Meta-Analysis (2010, unknown): “…2005 10 0.26 1.83 0.80 0.19 Tenreyro, 2001 4 0.29 0.70 0.53 0.09 Thom, Walsh, 2002 20 -0.10 0.74 0.11 0.06 Verdeja, 2005 15 -1.38 1.90 0.39 0.23 Walsh, 2006 16 -9.01 15.41 4.35 1.69 Yeyati, 2003 10 0.47 1.00 0.58 0.05 APPENDIX 4 Within-Study Meta-Analysis of RTAs effect on trade Study…”