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Rishav Bista, Erik Figueiredo and Brandon Sheridan
''Heterogeneous time zone effects and exports''
( 2019, Vol. 39 No.2 )
The negative effect of time zone differences on trade flows due to an increase in trade costs across country-pairs has been well established in the literature. Recent studies also find trade cost elasticity to be heterogeneous across country-pairs and across the distribution of trade flows. We use a quantile estimation to examine whether time zone differences have heterogeneous effects along the conditional distribution of exports. This estimation enables us to identify the log-linear gravity model with zero trade flows. We find that the negative between time zone differences and trade is driven mainly by country-pairs that trade the least. Specifically, we find that while time zone differences negatively impact trade in general, these differences affect countries at the low end of the trade distribution (10th percentile) more compared to higher end of the trade distribution (90th percentile). Our results further demonstrate the potentially large fixed costs associated with trade, especially for country-pairs that trade the least.
Keywords: Time zone effects, exports, quantile regression
JEL: F1 - Trade: General
F2 - International Factor Movements and International Business: General
Manuscript Received : Oct 24 2018 Manuscript Accepted : May 02 2019

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