on the existence of sunspot equilibria in an overlapping generations model abstract the existence of sunspot equilibria is shown in a one commodity overlapping generations model without stationarity assumptions on preferences endowments or nominal taxes the essential assumption is that there is a continuum of perfect foresight equilibria the technique is also useful for constructing stationary sunspot equilibria when they exist consumption in a sunspot equilibrium is shown to lie within the range consistent with perfect foresight

indeterminacy of stationary equilibrium in stochastic overlapping generations models abstract in this paper we consider the local uniqueness properties of stationary rational expectations equilibria ree in a stochastic overlapping generations olg model it is known that in non stochastic olg models steady state equilibria are locally isolated although there may exist indeterminate non stationary perfect foresight equilibria we show by construction that in the stochastic model even stationary equilibrium may be indeterminate we also show that this result is robust in the sense that there exists a non empty open set of economies for which the result is true

a financial portfolio approach to inventory behaviour japan and the uk abstract the paper analyses the determinants of the inventory to assets ratio in panel data sets of japanese and uk firms in the period 1960 1985 the analytical framework sets inventory decisions in the context of decisions by the firm about other assets and liabilities in contrast to traditional models of inventories investment in inventories in japan is found to be particularly related to sector specific inflation rates and expected sales negatively to expected profits and not much affected by interest rates by contrast uk inventories are generally positively related to profit rates and respond to short term interest rates once other variables are taken into account the coefficient on a time trend is positive for japan negative for britain which casts some doubt on the widely held view of japanese innovation in inventory holding

sunspot equilibria and periodic cycles under idiosyncratic uncertainty abstract this paper investigates how some intrinsic uncertainty affects the existence of sunspot equilibria and deterministic cycles in an overlapping generations model in the model there exists an intrinsic idiosyncratic uncertainty under which each individual has a small probability of losing consumption goods due to the law of large numbers this uncertainty causes no fundamental macroeconomic fluctuation however since it may change the dynamic stability the model may have both stationary sunspot equilibria and deterministic cycles even if the degree of relative risk aversion is small in particular these equilibria can exist even if the probability of loss is negligible

testing a discrete switching disequilibrium model of the uk labour market this paper develops a test procedure for serial correlation for discrete switching disequilibrium models which include both an endogenous price adjustment equation and lagged dependent variables the tests are applied to a model of the u k labor market and the model is respecified in the light of the test results

input and output inventories in the uk what is the role of inventories in uk manufacturing we present and estimate a model of inventories that considers separately finished goods and input i e the sum of raw materials and work in process inventories our results suggest that both types of inventories are used for production level and production cost smoothing we identify a small but significant negative relationship between inventories and the real interest rate thus providing support for one of the textbook channels of the monetary policy transmission mechanism variance decompositions indicate that technology shocks are the dominant driving factor behind cyclical changes in inventories

an econometric view on the estimation of gravity models and the calculation of trade potentials this paper presents an ar 1 model in the spirit of hausman and taylor zero differences between actual and in sample predicted trade flows large systematic differences between observed and in sample predicted trade flows only indicate model misspecification and econometric problems out of sample predictions make sense if countries of interest are in an early stage of the transformation process the gravity model remains an interesting tool for the calculation of counterfactuals e g the impact of catching up in gdp per capita in the ceec or of the reduction of trade costs via infrastructure investments or tariffs on bilateral trade etc for this line of research the difference between short term and long term influences could provide interesting insights

uniqueness of an equilibrium in infinite horizon economies subject to taxes and externalities abstract this paper verifies the uniqueness of an equilibrium for a class of stochastic infinite horizon economies with capital that are subject to distortionary taxes or externalities the proof develops the property of concavity for a nonlinear monotone operator whose fixed points correspond to equilibria as the underlying monotone operator has been useful for establishing the existence of an equilibrium and for computing an equilibrium this approach also brings under one roof the study of existence uniqueness and approximation of an equilibrium in distorted economies journal of economic literature classification numbers c60 h20

the determinants of manufacturing inventories in the uk the authors examine the determinants of inventory holding by the u k manufacturing sector over the period 1968 89 they find that inventory levels respond positively to output and its conditional variance and negatively to the level of gearing tehnological innovation in the form of computerized inventory control leads to a fall in the stock output ratio epirical results for inventories are examined in a cointegration and a general to specific error correction model with conditional variances estimated using an arch framework a backward looking error correction model is found to outperform a forward looking model although the latter also provides a reasonable fit to the data copyright 1993 by royal economic society

inventories and asymmetric business cycle fluctuations in the uk a structural approach this paper investigates the movement of manufacturing inventories and production over the business cycle to arrive at an asymmetric structural equilibrium correction model initially cross correlation coefficients and deepness and steepness tests for skewness are utilized to present descriptive statistics of the time series cointegration analysis is performed on each disaggregate inventory by stage of production finished goods work in progress and raw materials with a set of explantory variables restricted cointegration vectors are added to the symmetric and non symmetric specifications of the structural equilibrium correction model these are compared by parameter constancy tests and one step ahead forecasts

exporting to new destinations and the effects of tariffs the case of meat commodities this study uses a random parameter probit estimation to examine the effects of tariff liberalization on the probability of establishing new trading relationships in meat commodities our simulation results indicate that the effects of tariff reductions decrease with distance but increase with the level of development the probabilities of trade increase at an increasing rate with the size of tariff reductions thus justifying calls for ambitious liberalization schemes canada and mexico are the nafta countries that are most likely to export in response to eu tariff reductions on bovine and poultry meats while brazil and argentina emerge as the mercosur countries most likely to penetrate the eu bovine meat market after eu tariff reductions uruguay s probability to export poultry meat is most responsive to eu tariff reductions

endogenous strategic business cycles this paper examines an overlapping generations version of the shapley shubik market game we show existence of equilibria for the simple one commodity model and analyze the dynamics of the equilibrium trajectories generated in the model because of the non linearities generated by strategic interaction of agents in the model we find that complex and chaotic equilibrium dynamics are possible in this model for a much broader range of preferences than those for which grandmont econometrica53 no 5 1995 995 1045 found complicated dynamics in the perfectly competitive version of this model these results then provide an alternative to the usual technology based explanation for the historical fact that business cycles became an important economic phenomenon only with the onset of industrialization journal of economic literatureclassification numbers c72 c73 d51 l16

revisiting the effects of regional trade agreements on trade flows with proper specification of the gravity model this paper uses a gravity model to assess ex post regional trade agreements the model includes 130 countries and is estimated with panel data over the period 1962 1996 the introduction of the correct number of dummy variables allows for identification of vinerian trade creation and trade diversion effects while the estimation method takes into account the unobservable characteristics of each pairs of trade partner countries the endogeneity of some of the explanatory variables as well as a potential selection bias in contrast to previous estimates results show that regional agreements have generated a significant increase in trade between members often at the expense of the rest of the world

macroeconomic policy design and control theory a failed partnership my subject is the applicability of control theory to the pressing questions of macroeconomic policy design that face us both domestically and in the international arena i approach the issue with some trepidation conscious that i am a relative amateur in control matters i am also mindful of the dangers of claiming too much in the field of policy design those were nicely stated in a broader context by that eminent biologist sir peter medawar i984 when he wrote

the allocation of aggregate risk secondary market trades and financial boom bust cycles the financial crisis of 2007 08 started with the collapse of the market for collateralized debt obligations backed by subprime mortgages in this paper we present a mechanism aimed at explaining how a freeze in a secondary debt market can be amplified and propagated to the real economy and thereby cause a recession moreover we show why such a process is likely to be especially strong after a prolonged expansion based on the growth of consumer credit and endogenously low risk premia hence our model offers a new perspective on the links between the real and financial sectors and we show how it can help make sense of several macro economic features of the 2001 09 period the key elements of the model are heterogeneity across agents in terms of risk tolerance a financial sector that allocates systematic risk efficiently across agents and real decisions that depend on the price of risk

macroeconomics and a bit more reality macroeconomics in its widest sense is a topic which is too diverse to be usefully discussed in a single article i will therefore take a very narrow view of what might be included under this general title and focus my attention on my own main area of interest the development and use of large macro econometric models this is an area which has a long tradition and literature stemming form the pioneering work of tinbergen i937 and the cowles commission klein i950 an extensive survey of the development of modelling may be found in bodkin klein and marwah i99i macroeconometric modelling grew rapidly in importance during the late i950s and the i960s going on to achieve a very influential role inmacroeconomic policy making during the i970s its failure to deliver the detailed economic control which it had seemed to promise then led to a barrage of attacks ranging from disillusion and sceptiscism on the part of policy makers to detailed and well argued acadeinic criticism of the basic methodology of the approach perhaps the most powerful and influential of these academic arguments came from sims i980 in his article macroeconomics and reality sims argued on three quite separate grounds against the basic process of model identification which lies at the heart of the cowles commission methodology firstly that economic theory gives rise to identification restrictions which are typically more complex than those traditionally applied in macroeconometric models in particular he said that theory normally implies complex cross equation restrictions which require system estimation and which cannot be imposed on a single equation basis secondly that traditional identification conditions are often met simply because of the presence of dynamics in the models sims argued that this identification is spurious and technically invalid as purely dynamic terms cannot help in structural identification in the conventional sense finally he said that the importance of expectations effects and the interaction of policy regimes and agents expectations make identification very difficult sims argued that any one of these problems would form a challenging but feasible research agenda but that doing all of these at once would be a programme which is so challenging as to be impossible in the short run he then proposed a methodology based on vector auto regressive var models

manufacturing stocks and forward looking expectations in the uk this paper derives a model of the stocks plan based on optimal behavior by the firm when facing adjustment costs with forward looking expectations formation estimates of the model are reported for manufacturing using three alternative expectations mechanisms for determining expected sales time series published forecasts derived from national institute published forecasts and rational expectations the latter uses a submodel dependent on weakly exogenous variables single equation and whole model comparisons are made of the stocks equation estimated with forward expectations versus a traditional backward looking model these favor the forward looking model copyright 1986 by the review of economic studies limited

existence and local uniqueness of functional rational expectations equilibria in dynamic economic models abstract this paper established the existence and local uniqueness of stationary functional rational expectations equilibria for an open set of multi good multi agent pure exchange overlapping generations models in which agents endowments are random such equilibria are given by prices which are functions of one period lagged prices and endowments and of current endowments

sunspot like effects of random endowments abstract random endowments can affect economic outcomes in two ways directly by affecting resources and indirectly by endogenously affecting expectations this second effect which we call a sunspot like effect allows prices to overreact to movements in fundamentals we prove that sunspot equilibria can be viewed as the limiting case of markets overreacting to small shocks to fundamentals two examples illustrate the theorem and show that sunspot like effects can be present even with significant shocks to fundamentals

comparative statics and perfect foresight in infinite horizon economies does a pure exchange economy with an infinite time horizon have determinate perfect foresight equilibria when there is a finite number of infinitely lived agents equilibria are generically determinate this is not true with overlapping generations of finitely lived agents we ask whether the initial conditions together with the requirement of convergence to a steady state locally determine an equilibrium price path in this framework there are many economies with isolated equilibria many with continua of equilibria and many with no equilibria at all with two or more goods in every period not only can the price level be indeterminate but relative prices as well furthermore such indeterminacy can occur whether or not there is fiat money and whether or not the equilibria are pareto efficient this paper considers whether infinite horizon economies have determinate perfect foresight equilibria this question is of crucial importance if instead equilibria are locally indeterminate not only are we unable to make comparative static predictions but the agents in the model are unable to determine the consequences of unanticipated shocks the idea underlying perfect foresight is that agents expectations should be the actual future sequence predicted by the model if the model does not make determinate predictions the concept of perfect foresight is meaningless we consider two extreme cases the first with a finite number of infinitely lived consumers and the second with an infinite number of finitely lived consumers an overlapping generations model both are models of stationary pure exchange economies no production including the storage of goods between periods can occur these models are unrealistic but are the easiest to study extensions of the results of this paper to models with production infinitely lived assets and mixtures of the two types of consumers are presented by muller and woodford 29 when there is a finite number of infinitely lived consumers we argue that equilibria are generically determinate this is because the effective number of equations determining equilibria is not infinite but equal to the number of agents minus one and must determine the marginal utility of income for all but one agent generically near an equilibrium these equations are independent and exactly determine the unknowns when there are infinitely many overlapping generations this reasoning breaks down an infinite number of equations is not necessarily sufficient to determine

north south and distance in the gravity model abstract it is generally assumed that distance in the gravity model strictly reflects frictions impeding bilateral trade however distances north south could also reflect differences in factor endowment that provide opportunities for profitable trade this paper investigates the hypothesis that if we control for distance in the ordinary sense differences north south promote international trade the hypothesis receives ample support moreover the significance of differences north south survives a battery of robustness tests concerning period distinctions between differences in latitude north north north south and south south and controls for other measures of differences in factor endowment such as differences in per capita output and differences in average temperature rainfall and seasonal range in temperature the impact of differences north south on bilateral trade has also been falling this decline in turn might be partly responsible for the weakening of the influence of distance that has been occurring since world war ii this last hypothesis receives confirmation as well finally the paper examines the impact of internal distance and remoteness on trade since both variables are country specific this is done by studying their impact on the country fixed effects themselves in the earlier estimates internal distance turns out to have a far greater impact than remoteness by an order of 10

disequilibrium models with rational expectations an application to the uk labour market this paper develops and estimates an explicit switching model for the u k labour market which includes expectations terms in the labour demand function these expectations terms are dealt with by using the rational expectations hypothesis

on endogenous competitive business cycles the belief that the long run equilibrium of a competitive monetary economy that does not experience any exogeneous shocks whether originating from the external environment or from policy should be modelled as a state that is stationary or perhaps growing at a constant rate seems to be deeply rooted in the mind of some economists

the multivariate flexible accelerator model its empirical restrictions and an application to u s manufacturing this paper derives an exhaustive set of restrictions implied by the multistock flexible accelerator specification of the adjustment cost model for the firm the flexible accelerator specification of the demand for capital and labor is estimated using u s manufacturing annual data for the 1947 1976 period the consistency of the data with the model is examined by testing the validity of the derived restrictions finally the conditions which permit aggregation over firms are determined and tested empirically the flexible accelerator specification has been popular in the empirical literature on interrelated investment and employment decisions see nadiri and rosen 38 coen and hickman 10 and schramm 40 more recent examples include sargent 39 berndt fuss and wavermann 4 berndt and morrison 6 and meese 34 under suitable assumptions the specification may be rationalized by the adjustment cost model of the firm eisner and strotz 13 lucas 30 mortensen 35 extends the work of lucas and derives some empirically testable restrictions of the accelerator specification that are implied by the adjustment cost framework the broad objective of this paper is to provide a more rigorous and comprehensive test of the adjustment cost model than is presently found in the literature this objective is achieved in three stages first we offer an alternative derivation of the mortensen restrictions and more importantly we prove theorem 1 that his restrictions are exhaustive i e we establish an integrability result for the flexible accelerator adjustment cost model second the flexible accelerator specification of the demand for capital and labor is estimated using total u s manufacturing annual data for the 1947 76 period it is assumed that firms minimize expected production costs subject to a technology which implies that capital and labor stocks are costly to adjust while a third factor materials is freely adjustable the consistency of the data with the adjustmentcost framework is examined by testing for the validity of the derived restrictions further we test the validity of some separability restrictions on the adjustmentcost technology that to varying degrees are imposed a priori in all of the cited empirical studies finally we provide a complete characterization of the individual firm technologies which justify the common assumption of the existence of a representative firm this problem of aggregation over firms which has been

self fulfilling risk panics abstract recent crises have seen large spikes in asset price risk we propose an explanation for such panics based on self fulfilling shifts in beliefs about risk a negative link between the curre

multiplicity of equilibria a pure exchange general equilibrium model is considered and the equilibrium set is studied it is shown for all total endowments and an open and dense set of preferences that if there arel 2 commodities andm 2 consumers then there exists a set of distributions of endowments with nonempty interior such that the associated economies have at leastl 1 min l m equilibria forl min l m even and at leastl 2 min l m equilibria forl min l m odd journal of economic literature classification number d51

information and capital flows the determinants of transactions in financial assets abstract we show that a gravity model explains international transactions in financial assets at least as well as goods trade transactions our results support the hypothesis that informational asymmetries are responsible for the strong negative relationship between asset trade and distance this result is very important for theories of asset trade portfolio adjustments and home bias we strengthen it by investigating the roles of explicit informational variables as well as distance in explaining separately cross border trade in corporate equities corporate bonds and government bonds

forward looking price setting in uk manufacturing given an equilibrium pricing rule minimization of a multiperiod quadratic cost function yields a precise specification for the weights on the leads and lags of a dynamic pricing equation using an equilibrium cointegrating vector the theoretical specification is found to fit the u k manufacturing data remarkably well non nested tests fail to reject either the backward looking error correction or the forward looking model against the alternative so long as dynamic homogeneity is imposed in the error correction model this is consistent with the notion that the error correction model is conflating the true structural model which is forward looking with the expectation formation process copyright 1992 by royal economic society

quasifundamental variation in the price level and the inflation rate abstract this paper describes a class of overlapping generations economies that have quasifundamental qf equilibria equilibria in which the price level and inflation rate are positively correlated with a fundamental random variable despite the existence of an alternative pareto dominant equilibrium in which the price level and or inflation rate are constant in qf equilibria the inflation rate is excessively variable using either quantitative or welfare based variability measures these equilibria also provide rational expectations adjustment processes under which the low inflation monetary steady state is dynamically stable journal of economic literature classification numbers e31 e32 e41

growth externalities and sunspots abstract in this paper we consider a simple model of neo classical capital accumulation with production externalities in which a continuum of identical infinitely lived agents produce output from a standard stationary neo classical production technology and choose their actions to maximize a discounted sum of single period utilities because of the presence of the externality in production the model exhibits sunspot equilibria

multilateral agricultural trade liberalisation the contrasting fortunes of developing countries in the doha round an applied general equilibrium model is used to assess the impact of multilateral trade liberalisation in agriculture with particular emphasis on developing countries we use original data and the model includes some specific features such as a dual labour market applied tariffs including those under preferential regimes and regional agreements are taken into account at the detailed product level together with the corresponding bound tariffs on which countries negotiate the various types of farm support are detailed and several groups of developing countries are distinguished simulations give a contrasted picture of the benefits developing countries would draw from the doha development round the results suggest that previous studies have neglected preferential agreements and the binding overhang in tariffs as well as domestic support and have treated developing countries with a high level of aggregation and been excessively optimistic about the actual benefits of multilateral trade liberalisation regions like sub saharan africa are more likely to suffer from the erosion of existing preferences the main gainers of the doha round are likely to be developed countries and cairns group members

trade creation and trade diversion in the eec the lafta and the cmea 1960 1994 in a simplified version of the gravity model appropriate dummy variables have been introduced to analyse the effects of both trade creation and trade diversion by three economic organizations the european economic community eec the latin american free trade association lafta and the council of mutual economic assistance cmea for the period 1960 94 five year intervals are the main subject of measurement the results show that both trade creation dummies and trade diversion dummies have statistically significant coefficients which show the appropriateness of this new approach the trade creation effect and trade diversion effect of each institution are proved to be generally weakening during the 1990s it is also observed that each organization has a distinctive international trade character for japanese trade a similar approach is used to analyse nonaligned trade by japan with particular interest in the effects of these three institutions on trade with japan the result is that there is no s

instrumental variables procedures for estimating linear rational expectations models abstract this paper illustrates how to use instrumental variables procedures to estimate the parameters of a linear rational expectations model these procedures are appropriate when disturbances are serially correlated and the instrumental variables are not exogenous we compare our procedures to some alternative estimators that estimate free parameters from restrictions implied by the euler equations the procedures are applicable to a variety of linear rational expectations models several examples of which we cite

manufacturing stocks expectations risk and co integration the modelling of firms inventory behaviour has been plagued by structural instability and despite a great deal of research effort over recent years little headway has yet been made in producing a structurally stable model of stock levels wallis et al i987 surveyed the main uk models of inventory behaviour and concluded that the tests of predictive failure are particularly powerful when conducted over periods in which data characteristics change and over half the equations we consider are rejected on the basis of their predictive performance in the early i980s this is a surprising result since the poor performance of their predecessors over this period was a prime motivation for the research that has led to the current specifications the similarity in turning points in the forecast errors both for the aggregate stockbuilding equations and for the different categories of stocks suggests the omission of some factor s common to all specifications wallis et al i987 p 144 their analysis was conducted using within sample stability tests and more recent data would undoubtedly find an even higher rejection rate accordingly this paper seeks to identify important omitted components or misspecification in the existing models of inventory behaviour in response to the suggestion in the last sentence of the wallis et al quotation we take as our point of departure a number of recent papers on company sector behaviour which have focused on intertemporal optimisation under rational expectations the seminal work of sargent 1978 on the demand for labour has been followed by a number of studies which seek to treat the firms expectations of future variables in an explicit way this work includes nickell 1 984 and henry and wren lewis i 984 on the labour market and hall et al i986 on the determination of stock levels one common finding amongst these and many other papers is that of a root in the dynamic process under consideration which is close to unity this means that the long run solution for the model is poorly determined and this finding is a cause for some concern recently with the growth of the literature on cointegration see engle and granger 1987 hall i986 this finding takes on an even more serious aspect since a symptom of non cointegration is the lack of a well defined long run solution so the finding of a near unit root may be indicative that earlier researchers were in fact working with sets of variables which failed to cointegrate which would inevitably lead to spurious regression problems in the sense of granger and newbold i 974

markov rational expectations equilibria in an overlapping generations model abstract in this paper we analyze rational expectations equilibrium paths in a stochastic overlapping generations model the work presented here builds on results of s e spear j econ theory 35 1985 251 275 where is is shown that in a model with multiple goods and time non separable preferences a stochastic steady state equilibrium will generically fail to exist a stochastic steady state is defined as an equilibrium in which the stochastic process of endogenously determined variables is measure isomorphic to the exogenous process driving the model in this paper we establish the existence of non steady state equilibria and provide a characterization of their stochastic properties

inequality nonhomothetic preferences and trade a gravity approach we construct the first direct classification of goods as luxuries or necessities that is compatible with international trade data we then use it to test an idea that has not been tested directly in the literature countries income distributions are important determinants of their import demand and in particular of the difference in their import demands of luxuries versus necessities we interpret this result with the aid of a model in which preferences are nonhomothetic thus relaxing a long held and standard but empirically dubious assumption in the theory of international trade our model is strongly borne out by the results imports of luxuries increase with the importing country s inequality and imports of necessities decrease with it our calculations imply that if income distribution in the united states became as equal as in canada the united states would import about 9 13 fewer luxury goods and 13 19 more necessities

eliminating sunspot effects in overlapping generations models abstract we reappraise the robustness of sunspot effects in overlapping generations models azariadis s well known example economies have stationary deterministic fundamentals preferences technologies and endowments yet sunspots affect multiple equilibria and those equilibria are robust to common perturbations of underlying fundamentals however we find that judiciously splitting each of azariadis s goods into close substitutes eliminates sunspot effects and the remaining equilibrium is unique and deterministic forecasting thus becomes conclusive and there is no longer a role for government policy to stabilize excess volatility

are sunspots necessary in this paper i show the existence of stationary rational expectations equilibria in a simple two island overlapping generations model of the type first considered by lucas in which all uncertainty is endogenous the result is obtained by first constructing sunspot equilibria on each island separately and then using the equilibrium pricing equations to eliminate the sunspot variable in the resulting equilibrium each island s prices serve as the sunspot for the other island the constructed equilibrium is nontrivially stochastic

do regional trade agreements increase members agricultural trade the gravity model is used extensively to investigate the trade flow effects of regional trade agreements rtas a notable feature common to previous research is the use of aggregate trade data these studies typically report conflicting and even negative results of the effect of rtas on members trade using recent developments in the gravity equation suggested by baier and bergstrand 2007 and anderson and van wincoop 2003 this article demonstrates that rta effects on members trade depend fundamentally on whether the analysis focuses on agricultural or nonagricultural sectors on the particular agreement analyzed and on the length of the phase in period that characterizes almost all rtas copyright 2008 oxford university press

rational expectations in the overlapping generations model abstract this paper reports results on the character of the rational expectations equilibria of a stochastic overlapping generations model with heterogenous markets the model considered is a stationary overlapping generations model in which the endowments of young agents are subject to i i d random shocks the main result shown is that if there are l 1 commodities traded in every period then for most preferences the rational expectations equilibrium stochastic process of prices and allocations necessarily exhibits serial correlation this is in marked contrast to the one commodity model in which there always exists an equilibrium which is measure isomorphic to the endowment process

has distance died evidence from a panel gravity model the estimated coefficient of distance on the volume of trade is generally found to increase rather than decrease through time using the traditional gravity model of trade this distance puzzle proved robust to several ad hoc versions of the model using data for 1962 96 for a large sample of 130 countries the introduction of an augmented barrier to trade function removes the paradox yielding a decline in the estimate of the elasticity of trade to distance of about 11 percent over the 35 year period for the whole sample however the death of distance is shown to be largely confined to bilateral trade between rich countries with poor countries becoming marginalized

a gravity model analysis of meat trade policies abstract the conventional gravity model is revised for a single commodity and applied to meat markets to determine factors affecting trade flows of meat this study demonstrates that the gravity model for a single agricultural commodity can be parameterized more effectively by using time series and cross section data rather than cross section data alone this study reveals that trade policies and subsidies used by exporting and importing countries livestock production capacity in countries and distances play an important role in determining trade flows of meat long term agreements achieve the highest performance toward enhancing international meat trade import quotas and the hoof and mouth disease on beef greatly impair meat trade