Gravity Equations and Economic Frictions in the World Economy

Bergstrand, Jeffrey H.; Egger, Peter

doi:10.1007/978-0-230-30531-1_17

Cited by 28 publications

(2 citation statements)

References 142 publications

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“…Later on, Anderson and Van-Wincoop (2003) constructed a theoretical model on utility, exogenous bilateral trade costs and production, which was purely based on the demand side of the economy, and the case has considered multi-country general equilibrium model. Another economist Bergstrand (1985, 1989, 1990) and Bergstrand et al (2011, 2013), in his series of papers, develops theoretical gravity model. He started with constant elasticity of substitution (CES) preference and price within the model.…”

Section: Review Of Literaturementioning

confidence: 99%

Trade Flow of India with BRICS Countries: A Gravity Model Approach

Lohani

2020

Global Business Review

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In this article, we tried to investigate the trade flow of India with the rest of the Brazil, Russia, India, China and South African (BRICS) countries. To do this, we augmented the gravity model of trade by incorporating time-invariant variables such as per capita gross domestic product (PCGDP), distance, language, etc. We used a panel data econometric model (i.e., pooled ordinary least squares—OLS, fixed effect model) and Poisson–Pseudo Maximum Likelihood (PPML) methods. The sample size consists of BRICS countries and top merchandise export partner countries of India over the period of 2001–2016. The empirical results revealed that the traditional arguments of the gravity model in the context of India are valid. However, as distance increases, export of goods is adversely affected due to a higher trade cost. Moreover, common official language and common border positively influence trade. In addition, evidence on marginal trade creation (21% above the normal level) has been observed. The study suggests that the Indian government should negotiate trade dialogues to resolve trade barriers and market access hurdles among the BRICS countries. This will increase exports among nations. Thus, trade relationship among the BRICS members needs to be addressed on a priority basis.

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Section: Review Of Literaturementioning

confidence: 99%

Trade Flow of India with BRICS Countries: A Gravity Model Approach

Lohani

2020

Global Business Review

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“…Studies seeking evidence of a trade-enhancing effect of country integration seek to forecast the additional bilateral commerce that might be expected if two or more countries integrate. The ''gravity equation'' has been used to evaluate the ex-post partial or occasionally direct effects of economic integration agreements, national borders, currency unions, language, and other trade cost measures on bilateral international trade flows (Bergstrand and Egger, 2011). The basic gravity equation models trade between two countries as a rising function of their sizes and a decreasing function of their distance apart.…”

Section: The Gravity Model Of Tradementioning

confidence: 99%

Trade between China and 45 African countries: does the Gravity Model matter?

Ondja'a Abeng-Abe,

Ebissemitie Kisso

2023

JSAS

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The population of Africa and that of China put together amounts to a little over one-third of the world's total. The theoretical justification of the gravity model is applied to analyze the factors influencing bilateral trade between China and African countries using the panel data regression technique, covering the period between 2002 and 2021 and with special consideration for the income level of the African countries. Empirical results and estimates reveal that the economic size as well as the population of trade partners positively affect China’s trade with 45 African countries. The positive impact that distance has on trade is inconsistent with previous research. We conclude from the analysis that the factors affecting trade between China and African countries are, namely, the size of the population, the economic size represented by the GDP, and the distance between the countries. The indication of effects on the trade sector is important, and the sensitivity of the potential product to distance and countries varies considerably, giving a revealed comparative advantage. African countries should diversify their exports and improve their trade diplomacy.

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Are We in a De‐Globalization Process? The Evidence from Global Trade During 2007–2017

Shen

Cai

et al. 2021

Global Challenges

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Through the analysis of statistical data, some scholars believe that the globalization of trade is declining, and de‐globalization has become a trend, even since the financial crisis in 2008. However, the superficial decline of global trade volume cannot be taken as a corollary of the de‐globalization. It needs go deep into the structural analysis, and “globalization or de‐globalization” should be discussed by analyzing whether the global trade structure has changed. This paper finds that during 2007–2017, the global trade resistances are clearly classified, and trade resistance in the global community has increased significantly. Second, an expectation maximization (EM) algorithm is applied to divide global trade relations into two categories: intimate trade relations, whose barriers are mainly related to geographical distance; and unfriendly trade relations with high artificial barriers. Third, the trade purity indicator (TPI) is introduced to describe the trade environment of countries, and its evolution indicates after the financial crisis and for quite a long time, the structure of global trade has not changed much. And it shows some deterioration trend and structural adjustment after 2015, which indicates an opportunity for the emergence of de‐globalization in such an international environment full of uncertainty and challenges.

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Gravity Equations and Economic Frictions in the World Economy

Cited by 28 publications

References 142 publications

Trade Flow of India with BRICS Countries: A Gravity Model Approach

Trade Flow of India with BRICS Countries: A Gravity Model Approach

Trade between China and 45 African countries: does the Gravity Model matter?

Are We in a De‐Globalization Process? The Evidence from Global Trade During 2007–2017

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