Indo-Nepal Trade Relation: The Phenomenon of Black Hole Effect
AbstractIn the field of international trade, an economy is assumed to be reeling under the 'BLACK HOLE EFFECT' originating from another economy, if all the major variables of in ternational trade, irrespective of in which country they belong to, solely act in the favor of the latter economy. The results based on the models suggest that all the economic variables used in the study, whether Nepalese or Indian, show more favor to Indian economy compared to Nepalese economy confirming that Nepal has been spiraling into the 'BLACK HOLE EFFECT' originated from the Indian economy. Such an effect tends to be an everlasting phenomenon until and unless a substantially enough counterbal ancing force is applied to nullify it. The 'BLACK HOLE EFFECT' explains why Nepal has not been able to reap the benefit in trade with India that would have come from the 'locomotive effect' of the robust growth of the Indian economy.
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Bibliographic InfoArticle provided by Nepal Rastra Bank, Research Department in its journal NRB Economic Review.
Volume (Year): 26 (2014)
Issue (Month): 1 (April)
Foreign Trade; Gravity Model; Black Hole Effect;
Find related papers by JEL classification:
- C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models &bull Diffusion Processes
- F10 - International Economics - - Trade - - - General
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
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- Inmaculada Martínez-Zarzoso & Felicitas Nowak-Lehmann, 2003. "Augmented Gravity Model: An Empirical Application to Mercosur-European Union Trade Flows," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 291-316, November.
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