November 06, 2009

Contact:   Anne-Marie Craig

Alison Rauh, Class of 2011, has had a paper accepted by the professional journal, The American Economist. This is an extraordinarily commendable achievement for an undergraduate student. Her paper builds upon research that she earlier undertook in Davidson's "International Trade" course. The paper is entitled "Empirical Analysis of the Linder Hypothesis: The Case of Germany's Trade within Europe." The Linder hypothesis is an important theory regarding the determination of the trade patterns between countries; in the hypothesis, a given country tends to trade more intensely with countries that are at a similar per capita income level as the given country than with countries at more distant income levels. This Linder-type trade reflects similar demand structures and tastes across the trading partners and is importantly composed of trade in manufactured goods that possess substantial product differentiation. Employing an econometric testing model that controls for other influences and includes a sample of more than 40 European countries, Alison studies Germany's exports and imports from 2002-2007. Her results strongly confirm the Linder hypothesis. Additional findings of interest relate to Germany's pronounced export orientation and to the boost that membership in the European Union has given to the size of Germany's trade.