Economic integration agreements, border effects, and distance elasticities in the gravity equation

Bergstrand et al. (2015) argue that estimates of RTAs may capture common globalisation trends and therefore be biased upward.

“Bergstrand et al. (2015) argue that the estimates of RTAs may capture common globalisation trends and, therefore, be biased upward.”

The RTA effects from column (10) captured some common globalisation effects.

“This is consistent with the main argument from Bergstrand et al. (2015) that the RTA effects from column (10) have indeed captured some common globalisation effects.”

The gravity equation captures the effects of globalisation quite well.

“Keeping in mind that these estimates are relative to the border effect in 1980, the results reveal that the gravity equation captures the effects of globalisation quite well, which is consistent with Bergstrand et al. (2015) but in contrast to Bhavnani et al. (2002), who argue that gravity models cannot capture the effects of globalisation and dub this 'the missing globalisation puzzle'.”