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Cited by 248

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Distance, trade and FDI: a Hausman–Taylor SUR approach

Egger, Peter, Pfaffermayr, Michael·2004·Journal of Applied Econometrics

Abstract

This paper analyses the effects of distance as a common determinant of exports and FDI in a three‐factor New Trade Theory model, assuming that distance affects both pure trade costs and plant set‐up costs. Exports and FDI are not necessarily substitutes with respect to distance, since the predicted impact depends on its importance for fixed plant set‐up costs relative to transportation costs and on the relative importance of vertical MNEs. For the empirical specification, we suggest that the impact of time‐invariant variables such as distance is most appropriately analysed in a Hausman–Taylor SUR model. We apply our model to industry‐level data of bilateral outward FDI stocks and exports of the US and Germany. Copyright © 2004 John Wiley & Sons, Ltd.

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Metadata

Authors
Egger, P., & Pfaffermayr, M.
Venue
Journal of Applied Econometrics
Publisher
Wiley
Published
2004-03
Volume
19
Issue
2
Pages
227-246
ISSN
  • 0883-7252 (ISSN-L)
  • 1099-1255
OpenAlex
W3121756379
Cited by
248
References
1
FWCI
14.74
Type
journal article
Language
en
Open access
closed

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CoChat. (2026). Citation check: Distance, trade and FDI: a Hausman–Taylor SUR approach. https://app.cochat.ai/papers/10.1002/jae.721
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Egger, P., & Pfaffermayr, M. (2004). Distance, trade and FDI: a Hausman–Taylor SUR approach. Journal of Applied Econometrics. https://doi.org/10.1002/jae.721

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