What Determines Bilateral Trade Flows?
This paper undertakes an exhaustive search for robust determinants of in-
ternational trade, where "robustness" is tested using three popular empirical
methods. The paper is frankly atheoretical: our goal is solely to establish
statistically robust relationships. Along the way, however, we relate our results
to the empirical results obtained by prior researchers and to the received theory
of international trade. We .nd that robust variables include a measure of the
scale of factor endowments; .xed exchange rates; the level of development; and
current account restrictions. Variables that are robust under certain methods
and sample periods include exchange rate volatility, an index of sectoral sim-
ilarity, and currency union. However, the estimated coe¢ cient on currency
union is much smaller than estimates obtained by prior researchers.
