American Economic Review2014-07-08 2:11 PM

A Balls-and-Bins Model of Trade

Abstract
Many of the facts about the extensive margin of trade—which firms export, and how many products are sent to how many destinations—are consistent with a surprisingly large class of trade models because of the sparse nature of trade data. We propose a statistical model to account for sparsity, formalizing the assignment of trade shipments to country, product, and firm categories as balls falling into bins. The balls-and-bins model quantitatively reproduces the pattern of zero product- and firm-level trade flows across export destinations, and the frequency of multiproduct, multidestination exporters. In contrast, balls-and-bins overpredicts the fraction of exporting firms.

Full Article
http://www.aeaweb.org/articles.php?doi=10.1257/aer.104.7.2127

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(1) http://www.researchgate.net/publication/24000164_A_Balls-and-Bins_Model_of_Trade 
(2) http://vdisk.weibo.com/s/uHyiWbqebYTnP

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American Economic Review

The American Economic Review is a general-interest economics journal. Established in 1911, the AER is among the nation's oldest and most respected scholarly journals in the economics profession.

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