The determinants of foreign direct investment (FDI) are explored with gravity models, using a Poisson estimator and a linear estimator, both with fixed effects. The heterogeneity of product market regulations has a large and robust impact on cross-border investment: a reduction of regulatory...

Gravity models are used to explore the determinants of trade, making use of fixed effect linear estimators and a Poisson estimator (as in Santos Silva and Tenreyro, 2006) with fixed effects. Beyond usual determinants of trade such as GDP, distance, contiguity, free trade areas and language, this...