A Balls-and-Bins Model of Trade: Reply

Abstract

Blum, Claro, and Horstmann (2016) make two statements about the balls-and-bins model of Armenter and Koren (2014). First, that using firm-level shipment data changes some of our results. Second, that the balls-and-bins model is not an appropriate statistical method. We respond to the first statement and argue that the second statement is unfounded and unrelated to the first. Indeed, the work of Blum, Claro, and Horstmann (2016) is a perfect example of how to use balls-and-bins in a rich dataset to spot interesting data patterns. (JEL F11, F14)