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The Gravity Equation in International Trade in Services

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Abstract

The main purpose of this paper is to assess the impact of various factors on bilateral services trade, relative to that on bilateral goods trade. To accomplish this purpose, using the standard gravity model, we ran regressions on bilateral services trade and goods trade between 10 OECD member countries and other economies (including OECD member and nonmember countries) for the years 1999 and 2000. One main and interesting result is that services trade is better predicted by gravity equations than goods trade. Another interesting result is that there is a complementary relationship between goods exports and services imports.

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Authors and Affiliations

  1. Keio University, Tokyo, Japan

    Fukunari Kimura

  2. Division of Economics and International Trade, Kangwon National University, Chuncheon, 200-701, Korea

    Hyun-Hoon Lee

Authors
  1. Fukunari Kimura
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  2. Hyun-Hoon Lee
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Correspondence to Hyun-Hoon Lee.

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JEL no.

F10, F20, L51, F80

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Kimura, F., Lee, HH. The Gravity Equation in International Trade in Services. Rev. World Econ. 142, 92–121 (2006). https://doi.org/10.1007/s10290-006-0058-8

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  • DOI: https://doi.org/10.1007/s10290-006-0058-8

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