| Abstract: |
In this essay I use the GLOBE research study by House et al. (2013) as a proxy
for measuring cultural distance. Unlike other studies, GLOBE introduces nine
cultural dimensions and focuses exclusively on managers, allowing for a
distinct glimpse into the values of people actually making trade decisions. I
make use of a state-of-the-art PPML approach using data on international trade
flows together with intra-national trade flows (Yotov, 2012) and a
comprehensive set of fixed effects to consistently estimate a gravity equation
using a panel from 1995 to 2004. I distinguish between different industries by
following the goods classification introduced by Rauch (1999). The results
show that cultural differences indeed effect trade values differently over
time, but their size and impact depends on the chosen measure of cultural
distance and on the industry classification. |