GMM estimator:an application to intraindustry trade

• Autor(a) principal: Leitão, Nuno Carlos
• Data de Publicação: 2012
• Tipo de documento: Artigo
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10400.15/615
• topic: Intra-industry trade; Horizontal intra-industry trade; Vertical intra-industry trade; Automobile industry; European Union (EU-27); Portugal

This paper investigates the determinants of intraindustry trade (IIT), horizontal IIT(HIIT), and Vertical IIT (VIIT) in the automobile industry in Portugal. The trade in this sector between Portugal and the European Union (EU-27) was examined, between 1995 and 2008, using a dynamic panel data. We apply the GMM system to solve the problems of serial correlation and the endogeneity of some explanatory variables. The findings are consistent with the literature. The difference between per capita incomes and factor endowments present a positive sign. These results are according to Heckscher-Ohlin predictions. The economic dimension has a positive impact on trade. A negative effect of the distance on bilateral trade was expected and the results confirm this, underlining the importance of neighbour partnerships for all trade.