Controlling for Heterogeneity in Gravity Models of Trade

Table 1: Regression results for single-year cross-section; augmented and basic versions; 1991-95dependent variable = log of exports1991 1992 1993 1994 1995CSa CSb CSa CSb CSa CSb CSa CSb CSa CSbconstant -5.154*(1.058)-4.954*(0.997)-5.380*(1.068)-5.184*(1.014)-4.913*(1.049)-4.943*(0.993)-4.798*(1.073)-4.797*(1.014)-4.686*(1.099)-4.694*(1.036)origin GDP 0.635*(0.050)0.670*(0.040)0.641*(0.051)0.671*(0.041)0.609*(0.050)0.658*(0.039)0.612*(0.053)0.663*(0.041)0.607*(0.055)0.662*(0.042)destination GDP 0.853*(0.046)0.805*(0.034)0.828*(0.046)0.784*(0.034)0.840*(0.046)0.807*(0.034)0.858*(0.046)0.820*(0.034)0.857*(0.046)0.817*(0.034)origin population 0.073(0.063)0.061(0.064)0.099(0.064)0.102(0.065)0.106(0.066)dest. population -0.075(0.055)-0.069(0.055)-0.044(0.055)-0.055(0.056)-0.060(0.056)distance -0.819*(0.081)-0.823*(0.079)-0.765*(0.078)-0.771*(0.080)-0.811*(0.081)-0.806*(0.080)-0.849*(0.082)-0.847*(0.081)-0.850*(0.083)-0.849*(0.081)contiguity 0.160(0.316)0.151(0.316)0.212(0.320)0.204(0.320)0.208(0.318)0.200(0.319)0.236(0.322)0.225(0.323)0.188(0.323)0.175(0.324)common language 0.704*(0.169)0.701*(0.169)0.729*(0.171)0.725*(0.171)0.740*(0.170)0.736*(0.171)0.661*(0.172)0.658*(0.172)0.662*(0.173)0.660*(0.173)log-likelihood -709.37 -710.92 -714.69 -715.90 -712.71 -714.19 -717.65 -719.33 -718.88 -720.712R 0.642 0.641 0.625 0.624 0.635 0.634 0.641 0.640 0.638 0.637All variables except for the contiguity and language dummies are in logs. Standard errors are in parentheses. * denotes significance at5% level. The basic version (CSa) is a form of the augmented version (CSa) with the coefficients on the populations restricted to zero.There are 422 observations for each year.27