Institutions and bilateral trade in Africa: an application of Poisson’s estimation with high-dimensional fixed effects to structural gravity model

2019 ◽  
Vol 27 (16) ◽  
pp. 1357-1361
Author(s):  
Abdulkareem Alhassan ◽  
Cem Payaslioglu
Keyword(s):  
Gravity Model ◽  
Fixed Effects ◽  
Bilateral Trade ◽  
High Dimensional

scholarly journals A Gravity Model Approach towards Pakistan’s Bilateral Trade with SAARC Countries

2019 ◽  
Vol 22 (4) ◽  
pp. 23-38 ◽  
Author(s):  
Waheed Ullah Jan ◽  
Mahmood Shah
Keyword(s):  
Gravity Model ◽  
Fixed Effects ◽  
Bilateral Trade ◽  
Negative Impact ◽  
Positive Impact ◽  
Panel Study ◽  
Test Results ◽  
Fixed Effects Model ◽  
Trade Potential ◽  
The Common

This research paper attempts to estimate the bilateral trade of Pakistan with SAARC countries using a gravity model of trade. This panel study covers the period from 2003 to 2016. The empirical results are obtained through pooled OLS, fixed‑effects, and random‑effects estimators. On the basis of Hausman test results, the paper concentrates only on the findings of the fixed‑effects model. The empirical findings reveal that the GDPs of both Pakistan and the partner country have a positive impact on bilateral trade. Market size has a negative impact on trade and this is justified on the basis of the absorption effect. Similarly, distance and exchange rate also have a negative correlation with bilateral trade. The study finds that Pakistan has very low trade with India and Afghanistan, despite the common border. A common language has a positive but insignificant impact on Pakistan’s bilateral trade. The Paper also attempts to calculate the trade potential of Pakistan. The findings reveal that Pakistan has high trade potential with all SAARC member countries except the Maldives and Afghanistan.

scholarly journals Determinants of trade flow of some selected non-traditional agricultural export commodities in Nigeria

2021 ◽  
Vol 21 (105) ◽  
pp. 18869-18885
Author(s):  
EA Etuk ◽  
◽  
IF Idem
Keyword(s):  
Gravity Model ◽  
Fixed Effects ◽  
Bilateral Trade ◽  
Trade Flow ◽  
Secondary Data ◽  
Positive Sign ◽  
Fixed Effects Model ◽  
Estimation Model ◽  
Trade Expansion ◽  
Agricultural Export

This study analysed the determinants of trade flow of some selected non-traditional agricultural export commodities in Nigeria, for the period 2007 to 2017. The objective of the study was to analyse the factors that determine the export of these commodities. The study used trade data of thirty-six importing countries of these commodities around the world. The secondary data used was sourced from various institutions’ databases. A balanced panel data from 36 countries for the years 2007-2017 were used with one dependent variable and ten explanatory variables (a total of n=396, N=36, and T=11); all variables were expressed in natural logarithm. The gravity estimation model was used in data analysis. The Hausman test was used in model selection and the test rejected the null hypothesis (random effects were efficient). Therefore, the fixed effects model was used in the gravity model results’ interpretation. The gravity model results indicate that Nigeria’s export of non-traditional commodities (classified as HS12 in the United Nations International Trade Statistics) follows the basic gravity model apriori expectations, implying that bilateral trade flows will increase in proportion to the trading partner’s Gross Domestic Product (GDP) and decrease in proportion to the distance involved.The level of openness of Nigeria’s economy and that of the importing countries were major determinants of trade flow of Nigeria’s HS12 commodity exports. This variable carried the expected positive sign for both Nigeria and its trading Partners and was also statistically significant at the 5% level. However, the real exchange rate variable was not a major determinant of HS12 commodity trade. The distance variable was statistically significant indicating the need for regional trade expansion. The dummy variable of the trading partner being an African country was positive and a significant factor in the determinants of the HS12 commodities. However, colonial or official language ties were negatively signed and significant, implying that this was not a major contributor to trade in these commodities. The study recommends that favorable import and export promotion policies and trade openness to boost growth in the quantity of non-traditional exports should form part of government trade policies; and Nigeria should also take advantage of the proposed African Free Trade Area considering the gains she stands to make through proximity in distance.

scholarly journals Trade impacts of the New Silk Road in Africa: Insight from Neural Networks Analysis

2021 ◽  
Vol 17 (2) ◽  
pp. 13-26
Author(s):  
Dumor Koffi ◽  
Komlan Gbongli
Keyword(s):  
Neural Networks ◽  
Gravity Model ◽  
Fixed Effects ◽  
Prediction Accuracy ◽  
Bilateral Trade ◽  
Mean Squared Error ◽  
Ordinary Least Squares ◽  
Machine Learning Algorithms ◽  
Accurate Estimation ◽  
The Impact

The Belt and Road Initiative (BRI) is aimed to strengthen the preferential reciprocal trade between China and the Belt-Road nations. Quantitative evaluations of BRI to determine whether it can explicitly provide more insight into China’s bilateral trade among its partners are needed. Hence, improving prediction accuracy while using more superior algorithms for sustainable decision-making remains essential since decision-makers have been interested in predicting the future. Machine learning algorithms, such as supervised artificial neural networks (ANN), outperform several econometric procedures in predictions; therefore, they are potentially powerful techniques to evaluate BRI. This study uses detailed China’s bilateral export data from 1990 to 2017 to analyze and evaluate the impact of BRI on bilateral trade using gravity model estimations and ANN analysis techniques. The finding suggests that China’s bilateral export flow among the BRI countries results in a slight increase in inter-regional trade. The study provides a comparison view on the different estimation procedures of the gravity model – ordinary least squares (OLS) and Poisson pseudo-maximum likelihood (PPML) with the ANN. The ANN associated with fixed country effects reveals a more accurate estimation compared to a baseline model and with country-year fixed effects. Contrarily, the OLS estimator and PPML showed mixed results. Grounded on the study dataset, the ANN estimation of the gravity equation was superior over the other procedures to explain the variability of the dependent variable (export) regarding the prediction accuracy using root mean squared error (RMSE) and R-square.

scholarly journals Trade and Infrastructure in the Belt and Road Initiative: A Gravity Analysis Based on Revealed Trade Preferences

2021 ◽  
Vol 14 (2) ◽  
pp. 52
Author(s):  
Cristina Di Stefano ◽  
P. Lelio Iapadre ◽  
Ilaria Salvati
Keyword(s):  
Gravity Model ◽  
Bilateral Trade ◽  
Trade Flows ◽  
Belt And Road Initiative ◽  
Total Trade ◽  
Multilateral Trade ◽  
Belt And Road ◽  
Trade Preferences ◽  
Entire Network ◽  
The Belt And Road

This paper aims at investigating whether and how the intensity of trade between a pair of countries changes when they experience improvements in their infrastructural systems. We carry out our analysis considering countries participating in the Belt and Road Initiative (BRI), a project specifically designed to promote infrastructural connectivity and therefore boost trade among the countries involved. Our empirical strategy relies on a particular specification of the gravity model, in which the dependent variable consists in an index of revealed trade preferences, calculated by comparing the actual value of trade flows between two countries with their expected value, proportional to the two countries’ total trade. Such methodology allows us to estimate bilateral trade intensity without resorting to the traditional “size” variables of the gravity model, taking the entire network of multilateral trade into account. We then study the possible impact of an improvement in infrastructure on a ‘gravity-adjusted’ measure of trade preferences, given by the residuals of our first estimations. Our results indicate that bilateral preferences among BRI countries will intensify inasmuch as they succeed in coordinating their infrastructural projects.

scholarly journals An empirical analysis of Pakistan’s bilateral trade and trade potential with China: A gravity model approach

2018 ◽  
Vol 6 (1) ◽  
pp. 1504409 ◽  
Author(s):  
Muhammad Saqib Irshad ◽  
Qi Xin ◽  
Zhang Hui ◽  
Hamza Arshad ◽  
Duncan Watson
Keyword(s):  
Gravity Model ◽  
Empirical Analysis ◽  
Bilateral Trade ◽  
Trade Potential ◽  
Model Approach

Currency Manipulations and Bilateral Trade Between China and the USA

2017 ◽  
Vol 52 (3) ◽  
pp. 171-184 ◽  
Author(s):  
Masoud Moghaddam ◽  
Jie Duan
Keyword(s):  
Exchange Rate ◽  
Gravity Model ◽  
Bilateral Trade ◽  
Trade Deficit ◽  
The Us ◽  
Spot Exchange Rate ◽  
Main Culprit ◽  
Long Time ◽  
The Usa ◽  
Strong Relation

The US trade deficit with China has existed for a long time, and its dollar value has been on the rise recently. It is widely believed that the main culprit is the manipulated value of Renminbi relative to the US dollar. Towards that end, this article re-examines the spot exchange rate and bilateral trade nexus using the Fourier approximation and a variant of the well-known gravity model during the sample period 1993: q1–2014: q1. Although China’s exports to the US Granger cause the exchange rate in a co-integrated space, the findings of a vector error correction model indicate that there is not a strong relation between the two. Indeed, within the aforementioned sample, only 15.52 per cent of changes in China’s exports to the USA are attributable to changes in the spot exchange rate. This is noticeably much smaller than impacts of the other variables utilized in the estimated gravity model. As such, the palpable trade imbalance between the USA and China cannot be single-handedly blamed on the spot exchange rate manipulations.

Currency Unions and Trade: A PPML Re‐assessment with High‐dimensional Fixed Effects

2018 ◽  
Vol 81 (3) ◽  
pp. 487-510 ◽  
Author(s):  
Mario Larch ◽  
Joschka Wanner ◽  
Yoto V. Yotov ◽  
Thomas Zylkin
Keyword(s):  
Fixed Effects ◽  
High Dimensional ◽  
Currency Unions

scholarly journals Measuring the Effect of Revealed Cultural Preferences on Tourism Exports

2018 ◽  
Vol 58 (8) ◽  
pp. 1262-1273 ◽  
Author(s):  
Sylvain Petit ◽  
Neelu Seetaram
Keyword(s):  
Gravity Model ◽  
Bilateral Trade ◽  
Data Set ◽  
Dummy Variables ◽  
Cultural Preferences ◽  
Step Procedure ◽  
Cultural Variable ◽  
Cultural Preference ◽  
Novel Method ◽  
Time Invariant

The aim of this article is to propose a novel method for measuring the effect of cultural preference on bilateral tourism receipts. The method applied is inspired from Disdier et al. (2010). Using the UNESCO classification and data on bilateral trade in cultural product, a proxy for cultural preferences is constructed. The variable is used in a gravity model for tourism export, which is estimated using a two-step procedure to avoid issues related to endogeneity. The data set used is a panel of 12 OECD countries for a period of 11 years. The variable for cultural preferences eliminates the problems with traditional methods, which by using dummy variables to account for cultural preferences, assume that the latter are time-invariant and symmetrical. The cultural variable constructed is found to be significant in explaining bilateral tourism exports with an elasticity of 0.39.

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