This paper reconsiders the estimation of structural gravity models. It introduces a constrained, projection-based Poisson
pseudo maximum likelihood estimation procedure (constrained PPML) that exploits the equilibrium conditions introduced by Anderson
and Van Wincoop (2003) for estimation and inference. The constrained PPML estimator avoids the estimation of the large number
of exporter and importer fixed effects, and provides more reliable inference than the unconstrained PPML estimator. Moreover,
based on the delta method the paper drives confidence intervals of counterfactual changes. Monte Carlo simulations yield encouraging
results on the performance of the constrained PPML estimator.
Review of International Economics, 2019, (27), pp.155-183
Using a panel data set of Austrian service exporting firms this paper examines the determinants of service exports at the
firm- and destination country level. We implement a random effects Heckman sample selection firm‐level gravity model as well
as a fixed effects Poisson model. Expected firm‐level service exports are decomposed into the intensive and extensive margins
of adjustment as a response to counterfactual changes. We find market demand to be a key determinant. Results also suggest
high service export potentials due to regulatory reform in partner countries within the EU. Adjustments at the extensive margin
only play a marginal role. Increases in firm size as well as changes in distance related costs are most effective in developing
new export relationships in services.
This paper provides evidence on the role of firm size and firm age for firm level net job creation in the Austrian economy
between 1993 and 2013 and during the Great Recession. We propose a new estimation strategy based on a two-part model to decompose
behavioural differences between exiting and surviving firms. Young firms contribute most to net job creation, despite high
relative exit rates, due to high growth rates among young surviving firms. Small firms have similar job creation rates conditional
on survival as large firms. Small firms' contribution to job creation is, however, smaller due to higher exit rates. The up-or-out
dynamics characterising less regulated economies such as the USA also apply to the more regulated Austrian economy. During
the Great Recession both the relative net job creation rate conditional on survival and the relative survival probability
of young firms decreased. The relative contribution of small firms to net job creation, by contrast, increased due to increased
relative job creation rates of small firms conditional on survival.