Despite widespread anecdotal evidence that lower trade barriers increase international trade, there is little firm quantitative evidence of the ‘trade-cost elasticity’ of trade flows, one of the two key aggregate statistics that have recently been identified as sufficient to quantify the...

A large class of models with CES utility and iceberg trade costs are now known to generate isomorphic “gravity equations.” Economic interpretations of these gravity equations vary in terms of two basic elements: the exporter's “mass” variable and the elasticity of trade with respect to...

One of the main policy sources of trade–cost changes is the formation of an economic integration agreement (EIA), which potentially affects an importing country's welfare. This paper: (i) provides the first evidence using gravity equations of both intensive and extensive (goods) margins being...