The authors argue that endogeneity of transportation costs needs to be taken into account when estimating the effect of distance on trade. Otherwise, the estimates of the distance effect may be biased and inconsistent. Endogenous transportation can introduce slope heterogeneity and spatial...

The authors argue that endogeneity of transportation costs needs to be taken into account when estimating the effect of distance on trade. Otherwise, the estimates of the distance effect may be biased and inconsistent. Endogenous transportation can introduce slope heterogeneity and spatial...

Typical panel data models make use of the assumption that the regression parameters are the same for each individual cross-sectional unit. We propose tests for slope heterogeneity in panel data models. Our tests are based on the conditional Gaussian likelihood function in order to avoid the...

The authors argue that endogeneity of transportation costs needs to be taken into account when estimating the effect of distance on trade. Otherwise, the estimates of the distance effect may be biased and inconsistent. Endogenous transportation can introduce slope heterogeneity and spatial...