Comparative Advantage, the Rank-size Rule, and Zipf's Law
2006-11-06
Research Paper
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Using a comprehensive international trade data set we investigate empirical regularities (known as Zipf’s Law or the rank-size rule) for the distribution of the interaction between countries as measured by revealed comparative advantage. Using the recently developed estimator by Gabaix and Ibragimov (2006) we find strong evidence in favor of the rank-size rule along the time, country, and sector dimension for three different levels of data aggregation. The estimated power exponents that characterize the distribution of revealed comparative advantage are stable over time but differ between countries and sectors. These differences are related empirically to country and sector characteristics, including population size, GDP, and factor intensities.
- Balassa Index
- rank-size rule
- Pareto distribution
- Zipf’s Law
- power law
- revealed comparative advantage
- C13 : Estimation
- C33 : Models with Panel Data
- R12 : Size and Spatial Distributions of Regional Economic Activity; Interregional Trade
- F1 : Trade
- L1 : Market Structure, Firm Strategy, and Market Performance
- O5 : Economywide Country Studies
- digit
- sector
- estimate
- trade
- country
- rank-size rule
- error
- balassa index
- advantage
- power
- table
- distribution
- 4- digit level
- index
- data aggregation
- coefficient
- rank-size
- observation
- level
- balassa
