Softwood lumber trade and trade restrictions: gravity model.

2021 ◽  
pp. 142-173
Author(s):  
Xin-tong Li ◽  
Fatemeh Mokhtarzadeh ◽  
G. Cornelisvan Kooten
Keyword(s):  
Gravity Model ◽  
Bilateral Trade ◽  
Likelihood Method ◽  
Trade Restrictions ◽  
Softwood Lumber ◽  
Trade Model ◽  
Negative Effect ◽  
Bilateral Trade Flows ◽  
Pseudo Maximum Likelihood ◽  
Gravity Trade Model

Abstract A gravity trade model can be used to determine the effects of policy on bilateral trade flows. The gravity model is initially explained and then used to determine the effect that U.S. tariffs have on softwood lumber (SWL) imports from Canada, using information from the 2006 Softwood Lumber Agreement. Quarterly data for seven Canadian and three U.S. regions for the period 2007-2017 are used to estimate a gravity model of SWL trade. The model is subsequently expanded to include Japan and China as separate regions, and then as a combined China-Japan region. The model is estimated using OLS and a Poisson Pseudo-Maximum-Likelihood method for trade quantity and value. Findings indicate that: (1) the imposition of a countervailing and/or anti-dumping duty usually has a negative effect on Canada's physical exports, but not in all cases; (2) the value of softwood lumber trade decreases by 26% on average under a tax/tariff compared with no duties; (3) the tax/tariff has a smaller but still significant impact on Canadian exports when China and Japan are included, as SWL exports are diverted from the U.S.; and, not surprisingly, (4) duties affect the value of lumber exports to a much greater extent than quantity.

Softwood lumber trade and trade restrictions: gravity model.

2021 ◽  
pp. 142-173
Author(s):  
Xin-tong Li ◽  
Fatemeh Mokhtarzadeh ◽  
G. Cornelisvan Kooten
Keyword(s):  
Gravity Model ◽  
Bilateral Trade ◽  
Likelihood Method ◽  
Trade Restrictions ◽  
Softwood Lumber ◽  
Trade Model ◽  
Negative Effect ◽  
Bilateral Trade Flows ◽  
Pseudo Maximum Likelihood ◽  
Gravity Trade Model

Abstract A gravity trade model can be used to determine the effects of policy on bilateral trade flows. The gravity model is initially explained and then used to determine the effect that U.S. tariffs have on softwood lumber (SWL) imports from Canada, using information from the 2006 Softwood Lumber Agreement. Quarterly data for seven Canadian and three U.S. regions for the period 2007-2017 are used to estimate a gravity model of SWL trade. The model is subsequently expanded to include Japan and China as separate regions, and then as a combined China-Japan region. The model is estimated using OLS and a Poisson Pseudo-Maximum-Likelihood method for trade quantity and value. Findings indicate that: (1) the imposition of a countervailing and/or anti-dumping duty usually has a negative effect on Canada's physical exports, but not in all cases; (2) the value of softwood lumber trade decreases by 26% on average under a tax/tariff compared with no duties; (3) the tax/tariff has a smaller but still significant impact on Canadian exports when China and Japan are included, as SWL exports are diverted from the U.S.; and, not surprisingly, (4) duties affect the value of lumber exports to a much greater extent than quantity.

scholarly journals The Effect of Corruption on International Trade: A Case Study of Indonesian Trade to Nine Countries

2018 ◽  
Vol 13 (1) ◽  
Author(s):  
Danang Ibnu Atsir ◽  
Sunaryati Sunaryati
Keyword(s):  
International Trade ◽  
Maximum Likelihood ◽  
Gravity Model ◽  
Bilateral Trade ◽  
Panel Data Analysis ◽  
Random Effect ◽  
Likelihood Method ◽  
Geographical Distance ◽  
Pseudo Maximum Likelihood

Corruption is a form of abuse of ethical authority by public officials, which is divided into two parts: bribery and forced collection. The effect of corruption like bribes and illegal levies is widespread in the public sector. One interesting investigation is the effect of corruption on international trade. Corruption becomes a barrier in international trade, where corruption plays a role in the access of trade goods and services from within and abroad. Using the gravity model, the focus of this research was the effect of corruption on international trade by taking a case study of Indonesia’s bilateral trade with its nine largest export destination countries. Using panel data, analysis tools used in this research were common effect, fixed effect, random effect and poisson pseudo maximum likelihood (PPML). In this research, it was found that geographical distance variable in its fixed units caused the omitted variable so that the error term correlated with independent variables. In order to overcome the problem, poisson pseudo maximum likelihood method was used in performing regression gravity model with linear log form, so the omitted variable issue on the geographical distance can be eliminated. The results of this research concluded that corruption played a role in international trade through bureaucratic mechanisms of trade and investment licensing and the effect of corruption was more detrimental to exporters.Keywords:   Gravity Model, Corruption, International Trade, Poisson Pseudo Maximum Likelihood (PPML).

Modeling bilateral forest products trade.

2021 ◽  
pp. 43-82
Author(s):  
Craig M. T. Johnston ◽  
Brad Stennes ◽  
G. Cornelisvan Kooten
Keyword(s):  
Bilateral Trade ◽  
Forest Products ◽  
The United States ◽  
Programming Models ◽  
Trade Barriers ◽  
Trade Restrictions ◽  
Price Equilibrium ◽  
Softwood Lumber ◽  
Trade Model ◽  
Spatial Price

Abstract The focus in this chapter is on the development of mathematical programming models used to model bilateral forest products trade. Theoretical outlines are provided of a multi-region, single product trade model and of an integrated, multi-region, multi-product trade model. The objective function and constraints are described mathematically, while the analysis takes into account horizontal and vertical chains and the need to calibrate the model using observed trade flows. Data sources are discussed, and the GAMS code is provided for the uncalibrated and calibrated versions of the model. The Canada-U.S. softwood lumber dispute is the raison d'être for much applied work in modeling forest products trade, especially on Canada's side. In this chapter, we examine several spatial price equilibrium (SPE) trade models that are currently used to investigate the implications of trade barriers imposed on Canadian exports of softwood lumber to the United States. The reason we consider bilateral trade is so that we can determine the impacts of trade restrictions on various regions in North America. We begin in the next section by specifying a general but vertically integrated SPE trade model.

scholarly journals What Determines Bilateral Trade Flows? Evidence from ECO Region

2019 ◽  
Vol 5 (1) ◽  
pp. 165-182 ◽  
Author(s):  
Muhammad Ramzan Sheikh ◽  
Ruth Kattumuri ◽  
Imran Sharif Chaudhry ◽  
Abodh Kumar
Keyword(s):  
Economic Growth ◽  
Modified Gravity ◽  
Bilateral Trade ◽  
Trade Flows ◽  
Least Square ◽  
Gravity Models ◽  
Trade Model ◽  
Least Square Regression ◽  
Bilateral Trade Flows ◽  
Gravity Trade Model

This study provides an analysis of Pakistan’s bilateral trade in Economic Corporation Organization (ECO) region. The main purpose of this study is to assess the determinants of bilateral trade flows using the gravity trade model. Panel least square regression has been applied over the period of 1995 to 2015. Two types of gravity models have been estimated: traditional gravity trade model and modified gravity trade model. The study has identified income, population, distance, adjacency, area, landlockedness, continent and terrorism as the main drivers of Pakistan’s bilateral trade flows with ECO countries. It is suggested that policies in Pakistan should focus on improving economic growth; offer incentives to Pakistani people to engage more in trade flows; improve transportation to trade with ECO countries; and take measures to eradicate terrorism.

Modeling bilateral forest products trade.

2021 ◽  
pp. 43-82
Author(s):  
Craig M. T. Johnston ◽  
Brad Stennes ◽  
G. Cornelisvan Kooten
Keyword(s):  
Bilateral Trade ◽  
Forest Products ◽  
The United States ◽  
Programming Models ◽  
Trade Barriers ◽  
Trade Restrictions ◽  
Price Equilibrium ◽  
Softwood Lumber ◽  
Trade Model ◽  
Spatial Price

Abstract The focus in this chapter is on the development of mathematical programming models used to model bilateral forest products trade. Theoretical outlines are provided of a multi-region, single product trade model and of an integrated, multi-region, multi-product trade model. The objective function and constraints are described mathematically, while the analysis takes into account horizontal and vertical chains and the need to calibrate the model using observed trade flows. Data sources are discussed, and the GAMS code is provided for the uncalibrated and calibrated versions of the model. The Canada-U.S. softwood lumber dispute is the raison d'être for much applied work in modeling forest products trade, especially on Canada's side. In this chapter, we examine several spatial price equilibrium (SPE) trade models that are currently used to investigate the implications of trade barriers imposed on Canadian exports of softwood lumber to the United States. The reason we consider bilateral trade is so that we can determine the impacts of trade restrictions on various regions in North America. We begin in the next section by specifying a general but vertically integrated SPE trade model.

scholarly journals The Trade Effects of Endogenous Preferential Trade Agreements

2011 ◽  
Vol 3 (3) ◽  
pp. 113-143 ◽  
Author(s):  
Peter Egger ◽  
Mario Larch ◽  
Kevin E Staub ◽  
Rainer Winkelmann
Keyword(s):  
Empirical Model ◽  
Bilateral Trade ◽  
Likelihood Estimation ◽  
Trade Agreement ◽  
Trade Theory ◽  
Preferential Trade ◽  
Indicator Variables ◽  
Bilateral Trade Flows ◽  
Pseudo Maximum Likelihood Estimation ◽  
Pseudo Maximum Likelihood

Structural new trade theory models have never been used to evaluate and quantify the role of preferential trade agreement (PTA) membership for trade in a way which is consistent with general equilibrium. Apart from filling this gap, the present paper aims at delivering an empirical model which takes into account both that PTA membership is endogenous and that the world matrix of bilateral trade flows contains numerous zero entries. These features are treated in an encompassing way by means of (possibly two-part) Poisson pseudo-maximum likelihood estimation with endogenous binary indicator variables in the empirical model. (JEL F11, F13, F15)

scholarly journals International trade and endogenous standards: the case of GMO regulations

2012 ◽  
Vol 11 (3) ◽  
pp. 415-437 ◽  
Author(s):  
MAURO VIGANI ◽  
VALENTINA RAIMONDI ◽  
ALESSANDRO OLPER
Keyword(s):  
International Trade ◽  
Gravity Model ◽  
Bilateral Trade ◽  
Composite Index ◽  
Trade Flows ◽  
Agricultural Products ◽  
Approval Process ◽  
Bilateral Trade Flows ◽  
Gmo Regulation ◽  
Bilateral Differences

AbstractThis paper quantifies the effect of GMO regulation on bilateral trade flows of agricultural products. We develop a composite index of GMO regulations and using a gravity model we show that bilateral differences in GMO regulation negatively affect trade flows. This effect is especially driven by labeling, approval process, and traceability. Our results are robust to the endogeneity of GMO standards to trade flows.

scholarly journals Recent Experience and Future Prospects of Pakistan’s Trade with China

2009 ◽  
Vol 14 (Special Edition) ◽  
pp. 87-110 ◽  
Author(s):  
Musleh-ud Din Musleh-ud Din ◽  
Ejaz Ghani ◽  
Usman Qadir
Keyword(s):  
Gravity Model ◽  
Free Trade ◽  
Free Trade Agreement ◽  
Bilateral Trade ◽  
Trade Agreement ◽  
Trade Flows ◽  
Recent Experience ◽  
Future Prospects ◽  
Short Term ◽  
Bilateral Trade Flows

This paper examines the prospects of expanding bilateral trade between Pakistan and China particularly in the context of the recently signed free trade agreement between the two countries. Using the augmented gravity model in the tradition of Rose (2004), the paper shows that there is significant potential for the expansion of bilateral trade between the two countries as a result of the free trade agreement. The paper also analyzes bilateral trade flows between the two countries in terms of a trade specialization index and the Grubel-Lloyd index of intra-industry trade. We show that bilateral trade between the two countries is heavily tilted in favor of China and that this situation may persist in the short term.

scholarly journals Effects of COVID-19 on trade flows: Measuring their impact through government policy responses

PLoS ONE ◽  
2021 ◽  
Vol 16 (10) ◽  
pp. e0258356
Author(s):  
Javier Barbero ◽  
Juan José de Lucio ◽  
Ernesto Rodríguez-Crespo
Keyword(s):  
Bilateral Trade ◽  
State Of The Art ◽  
Negative Impact ◽  
Trade Agreements ◽  
Trade Flows ◽  
Policy Responses ◽  
Negative Effect ◽  
Bilateral Trade Flows ◽  
Gravity Model Of Trade ◽  
The Impact

This paper examines the impact of COVID-19 on bilateral trade flows using a state-of-the-art gravity model of trade. Using the monthly trade data of 68 countries exporting across 222 destinations between January 2019 and October 2020, our results are threefold. First, we find a greater negative impact of COVID-19 on bilateral trade for those countries that were members of regional trade agreements before the pandemic. Second, we find that the impact of COVID-19 is negative and significant when we consider indicators related to governmental actions. Finally, this negative effect is more intense when exporter and importer country share identical income levels. In the latter case, the highest negative impact is found for exports between high-income countries.

The Rupture of the Hub -Spoke Effect of Bilateral Trade Flows when Rules of Origin are Relaxed: The Case of Agadir Agreement Countries.

2020 ◽  
Vol 38 (2) ◽  
Author(s):  
Esmat Mostafa Kamel
Keyword(s):  
Bilateral Trade ◽  
Methodological Approach ◽  
Control Groups ◽  
Rules Of Origin ◽  
Association Agreement ◽  
Sectoral Structure ◽  
Comparable Control ◽  
Bilateral Trade Flows ◽  
Double Differences ◽  
Pseudo Maximum Likelihood

This paper aims at shedding light on the extent to which the Agadir Association agreement has fostered inter regional trade between the EU_26 and the Agadir_4. It analyzes the remarkable variation in the spatial/sectoral structure of exports, and the extent to which it has been induced by the Agadir agreement itself or due to the adoption of RoO  PANEURO diagonal cumulative scheme. The dataset covers a timeframe from [2000 - 2014] designed to account for sector specific final and intermediate exports through a bilateral gravity model and through tbe Poisson Pseudo Maximum Likelihood Estimator PPML. The methodological approach is considered to be a two-fold one which starts by screening final export and intermediate flows through conducting a ‘Hierarchal Cluster Analysis’. Second step proceeds by exposing the export flows of the 3 clusters to treatment with diagonal RoO through ‘The Double Differences Approach’ DID benchmarked to equally comparable control groups. Across all scenarios applied a remarkable significance of the interaction term combining both treatment effects and time, for the coefficients of 11 out of the 13 sectors were detected and it further asserted that treatment with diagonal RoO contributed to increasing intra-Agadir’s_4 final and intermediate exports  and exports to E.U._26.

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