Show simple item record

dc.contributor.authorHallak, Juan Carlos
dc.date2006-09
dc.date.accessioned2007-03-20T19:58:45Z
dc.date.available2007-03-20T19:58:45Z
dc.date.issued2007-03-20T19:58:45Z
dc.identifier.urihttps://hdl.handle.net/2027.42/49537
dc.description.abstractThe Linder hypothesis states that countries of similar income per capita should trade more intensely with one another. This hypothesis has attracted substantial research over decades, but the empirical evidence has failed to provide consistent support for it. This paper shows that the reason for the failure is the use of an inappropriate empirical benchmark, the gravity equation estimated using trade data aggregated across sectors. The paper builds a theoretical framework in which, as in Linder’s theory, product quality plays the central role. A formal derivation of the Linder hypothesis is obtained, but this hypothesis is shown to hold only if it is formulated as a sector-level prediction. The “sectoral Linder hypothesis” is then estimated on a sample of 64 countries in 1995. The results support the prediction: after controlling for inter-sectoral determinants of trade, countries of similar per-capita income trade more intensely with one another. The paper also shows that a systematic aggregation bias explains the failure of the previous empirical literature to find support for Linder’s theory.en
dc.format.extent341583 bytes
dc.format.mimetypeapplication/pdf
dc.language.isoen_USen
dc.relation.ispartofseries24en
dc.subjectLinder hypothesisen
dc.subjectProduct qualityen
dc.subjectNorth-South tradeen
dc.subjectgravity equationen
dc.subjectaggregation biasen
dc.subjectSimpson’s Paradoxen
dc.subject.otherD12en
dc.subject.otherF1en
dc.subject.otherF12en
dc.titleA Product-Quality View of The Linder Hypothesisen
dc.typeWorking Paperen_US
dc.subject.hlbtoplevelSocial Sciences
dc.contributor.affiliationumInternational Policy Center (IPC); Gerald R. Ford School of Public Policyen
dc.contributor.affiliationumcampusAnn Arbor
dc.description.bitstreamurlhttp://deepblue.lib.umich.edu/bitstream/2027.42/49537/1/IPC-working-paper-024-Hallak.pdfen_US
dc.owningcollnameInternational Policy Center (IPC) - Working Paper Series


Files in this item

Show simple item record