The Poisson quasi-maximum likelihood estimator: a solution to the ‘adding up’ problem in gravity models

By J. Arvis, Ben Shepherd. 2012

146 citations recorded by the source corpus.

This article shows that the Poisson Quasi-Maximum Likelihood (QML) estimator applied to the gravity model produces estimates in which, summing across all partners, actual and estimated total trade flows are identical. Other methods such as OLS do not have this desirable property. Indeed, Poisson is the only QML estimator that preserves total trade flows. This result is an additional reason for preferring Poisson as a workhorse gravity model estimator.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/fdc8ac43db4f966a4577a8fc7e37009f87debc4f

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In Economics and Econometrics

1. Li-li Wang
2. Yong Zhao
3. K. Tang

In Finance

1. Li-li Wang
2. Yong Zhao
3. K. Tang

Citations in the corpus

• Do renewable electricity policies promote renewable electricity generation? Evidence from panel data (2013, background): “Details on the Poisson regression could be found in Winkelmann (2008) and Arvis and Shepherd (2011).”