Competing specifications of the gravity equation: a three-way model, bilateral interaction effects, or a dynamic gravity model with time-varying country effects?

Nuroğlu, Elif; Kunst, Robert M.

doi:10.1007/s00181-013-0696-3

Cited by 9 publications

(7 citation statements)

References 16 publications

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“…The econometric specification of the gravity model is a debatable topic in the literature. There is no uniformity of consensus about the econometric specification (21 -42) RIC Saleh Shahriar, Lu Qian, Sokvibol Kea, Nazir Muhammad Abdullahi THE GRAVITY MODEL OF TRADE: A THEORETICAL PERSPECTIVE of the gravity model (Egger, 2002;Kalirajan, 2008;Nuroğlu and Kunst, 2013;Matyas, 1997;Baltagi, Egger, and Pfaffermayr, 2015;Bergstrand, Egger, and Larch, 2013). The advantages of using panel data are well known.…”

Section: Econometric Techniques and Methods Of The Gravity Modelmentioning

confidence: 99%

The gravity model of trade

Shahriar

Kea

et al. 2019

RIC

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Purpose. The purpose of this study is to trace the theoretical developments of the gravity model of trade. The key question is: what are the dominant features of the development of the gravity trade model? Methodology. This research is conducted by employing a number of methods that include the historical, descriptive and analytical methods. The main contribution of this paper is to trace the historical and theoretical development phases of the gravity model. Findings. This study is a novel attempt in terms of the identification of the four distinctive phases of the development of the gravity model. This work would, therefore, expand the existing literature on the gravity model. We argue that the development of the gravity model is the outcome of many research efforts. A large body of literature has given the model a solid theoretical foundation. But there is no consensus about the proper econometric estimation methods of the model. The gravity model is significant both historically and analytically. It is a useful tool for the analysis of international trade. It has become a popular research device used by the researchers and policy makers around the world. The gravity is regarded as one of the most successful models in the literature of international economics. Originality. The original contributions of this paper lie in streamlining the consistent historical development of the gravity model over a longer period of time-frame, ranging from 1885 to 2018. Limitations and Implications. This work is theoretical aspects of the trade gravity model. Future researchers could overcome the limitations by combining the theoretical and empirical studies in a paper. This paper can help the future researchers in dealing with the broad body of literature of gravity model. Acknowledement. This study was supported by the National Natural Science Foundation of China (grants No.71673223 & 71473197), and a PhD scholarship from the China Scholarship Council (CSC). The first author would like to thank the CSC for the financial support. He also acknowledges the invaluable research advice and guidance received from Dr. Yoto V. Yotov, professor at the School of Economics of the Lebow College of Business at Drexel University, Philadelphia, USA. The authors are highly grateful to the anonymous reviewers, managing editor, and the editor-in chief for their kind help and critical comments on the earlier drafts of the paper. However, the authors are responsible for the contents and limitations of the study. They declared no conflict of interests.

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Section: Econometric Techniques and Methods Of The Gravity Modelmentioning

confidence: 99%

The gravity model of trade

Shahriar

Kea

et al. 2019

RIC

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“…Menurut Yotov, Monteiro, & Larch (2016), salah satu yang menjadi tantangan pada studi yang membahas variabel kebijakan perdagangan dengan perdagangan adalah menentukan estimasi yang paling tepat untuk mengatasi permasalahan endogeneity. (Nuroglu & Kunst, 2013) berusaha mengatasi dengan membuat lag (mundur) variabel terikat menjadi variabel bebas. Studi ini juga berupaya mengadopsi hal yang serupa pada persamaan berikut:…”

Section: Fixed Effect Modelunclassified

“…Hasil estimasi fixed effect model untuk semua komoditas menunjukkan bahwa besaran tarif bea keluar tidak secara signifikan memengaruhi volume perdagangan, walaupun arahnya sesuai hipotesis yaitu negatif, yang diestimasi baik tanpa maupun dengan variabel kontrol. Setelah dilakukan ditambahkan lag variabel terikat sebagaimana dilakukan (Nuroglu & Kunst, 2013) (Krugman, Obstfeld, & Melitz, 2018;Salvatore, 2013) serta penelitian terdahulu yang menyatakan bahwa bea keluar berdampak signifikan dan negatif terhadap volume perdagangan (Solleder, 2013;Sofjan, 2017;Suryana, Fariyanti, & Rifin, 2014;Syadullah, 2014).…”

Section: Hasil Estimasi Fixed Effect Modelunclassified

Pengaruh Kebijakan Bea Keluar terhadap Ekspor Indonesia ke Uni Eropa

2022

Journal ITRev

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The Indonesia-European Union Comprehensive Economic Partnership Agreement (IEU CEPA) negotiations have not been concluded yet because of critical pending matters. One of them is the EU's proposal regarding the exemption of Indonesian export duties. This study was conducted to give the view on exports from Indonesia to the European Union and other related matters, as well as the effect of the export duties imposition on Indonesian exports to the European Union. The research method used is a fixed-effect model, simultaneous equation model, and seemingly unrelated regression with a six-digit harmonized system code of the export commodity as the observation unit in the period 2007-2019 on a monthly basis. The estimation result showed that export duty and export volume are correlated simultaneously. The increase in export demand from the European Union significantly increased Indonesia's export duty tariffs, and Indonesia's export duty tariffs significantly reduced the export volume to the European Union. This paper found that export volume barriers shifted Indonesian export to the domestic market.

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“…In addition, the inclusion of country-pair fixed effects accounts for unobserved dyad-specific characteristics. Although the inclusion of importer-year, exporter-year and dyad fixed effects may be computationally cumbersome in large panels, it has set the new standard in the field (see also Egger and Pfaffermayr, 2003;Baldwin and Taglioni, 2006;Magee, 2008;Fugazza and Nicita, 2013;Nuroğlu and Kunst, 2014).…”

Section: Literaturementioning

confidence: 99%

Heterogeneous trade agreements, WTO membership and international trade: an analysis using matching econometrics

Kohl

Trojanowska

2015

Applied Economics

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This article explores the heterogeneous effects of trade agreements (TAs) and World Trade Organization (WTO) membership on the volume of international trade. We extend Baier and Bergstrand's (2009a) application of matching econometrics by distinguishing between different types of TAs and WTO participation and account for the endogenous nature of trade policy. For a panel data set covering 1960-2005 and 187 countries, we find that the treatment effect on international trade systematically varies with the type of TA and WTO membership.

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Competing specifications of the gravity equation: a three-way model, bilateral interaction effects, or a dynamic gravity model with time-varying country effects?

Cited by 9 publications

References 16 publications

The gravity model of trade

The gravity model of trade

Pengaruh Kebijakan Bea Keluar terhadap Ekspor Indonesia ke Uni Eropa

Heterogeneous trade agreements, WTO membership and international trade: an analysis using matching econometrics

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