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Can We Really Trust Offshoring Indices?, Davide Castellani, Luca De Benedictis, Daniel Horgos
Can We Really Trust Offshoring Indices?, Davide Castellani, Luca De Benedictis, Daniel Horgos
Luca De Benedictis
This paper argues that offshoring indices often measure something different than what we think they are. Using data from input-output tables of 21 European countries from 1995 to 2006 we decompose an offshoring index, distinguishing between a domestic (structural change) and an international component (imported inputs ratio). Regarding offshoring of business services, a large share of the index variation is driven by the domestic component. This is even more pronounced for overall service offshoring. In the case of material offshoring, by contrast, the international component drives the main variation of the indices. Our results therefore show that, regarding (business) services, …
Dummies For Policies Or Policies For Dummies. A Montecarlo Gravity Experiment, Maria Pina Cipollina, Luca De Benedictis, Claudio Vicarelli, Luca Salvatici
Dummies For Policies Or Policies For Dummies. A Montecarlo Gravity Experiment, Maria Pina Cipollina, Luca De Benedictis, Claudio Vicarelli, Luca Salvatici
Luca De Benedictis
The use of the gravity model to evaluate the effect of policies in a cross-country framework is largely predominant in the international economics empirical literature. This literature usually implements importer and exporter fixed effects to account for the theoretical Multilateral Trade Resistances, while preferential trade policies are approximated through the use of dummy variables. Results from a Monte Carlo experiment confirms that the identification of trade policy impact using a gravity equation including fixed effects is severely limited. Moreover, the consequences of the error in measurement of the policy variable are magnified by the fixed effects control for unobserved heterogeneity.