Two-Way Models for Gravity - Sciences Po Access content directly
Journal Articles Review of Economics and Statistics Year : 2017

Two-Way Models for Gravity

Koen Jochmans
  • Function : Author
  • PersonId : 962567


Empirical models for dyadic interactions between n agents often feature agent-specific parameters. Fixed-effect estimators of such models generally have bias of order n−1, which is non-negligible relative to their standard error. Therefore, confidence sets based on the asymptotic distribution have incorrect coverage. This paper looks at models with multiplicative unobservables and fixed effects. We derive moment conditions that are free of fixed effects and use them to set up estimators that are n-consistent, asymptotically normally-distributed, and asymptotically unbiased. We provide Monte Carlo evidence for a range of models. We estimate a gravity equation as an empirical illustration.
No file

Dates and versions

hal-03567923 , version 1 (12-02-2022)


Attribution - NonCommercial - NoDerivatives



Koen Jochmans. Two-Way Models for Gravity. Review of Economics and Statistics, 2017, 99 (3), pp.478-485. ⟨10.1162/REST_a_00620⟩. ⟨hal-03567923⟩
21 View
0 Download



Gmail Facebook X LinkedIn More