Hello, I'm writing a paper on a displacement effect of Sub-Saharan Africa's（SSA）exports on Russian exports on the common market. According to the most papers devoted to the displacement effect, it's possible that the variable of interest(SSA exports) may not be exogenous and it is therefore important to recognize its potential endogeneity. The most common instruments are GDP and the distance between the country and the common market.
So my question is maybe anyone has come across papers that has methodology for construction an instrumental variable (distance and GDP) not for one country (in most papers it's China) but for the group of countries, in particular SSA, in a gravity trade model?
Best regards
You should not add gdp in gravity model anymore, you must use country-year fixed effects istead.
I wrote a guide to run gravity models in stata.
https://www.researchgate.net/publication/351154064_International_trade_and_the_gravity_model_recent_evidence_in_theoretical_and_empirical_analysis
It will help you.
You Wu, maybe you can follow the references of this article https://www.econstor.eu/handle/10419/179859
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