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Gravity Model of International Trade, Its Variables, Assumptions, Problems and Applications

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  • Petra Bubáková
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    Abstract

    The paper deals with the issues of gravity models applied in the field of trade flow analysis. Applied variables, assumptions of their impacts, problems of gravity equations and their resolving (namely the endogeneity problem, the heterogeneity problem, and the identification problem) are defined in this paper. The paper provides a detailed overview of selected gravity model publications in scientific papers with an impact factor since 2000. According to the document analysis, it is clear that panel data are the most commonly used type of data in the 21st century. Fixed effects models are recommended. The choice of variables depends on the subject being examined and on the aim of the analysis. Correct model specification and inclusion of relevant variables are highly important. The results were elaborated as part of the research project IGA 20121050 "Spatial regional market integration with agricultural raw materials".

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    Bibliographic Info

    Article provided by University of Economics, Prague in its journal Acta Oeconomica Pragensia.

    Volume (Year): 2013 (2013)
    Issue (Month): 2 ()
    Pages: 3-24

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    Handle: RePEc:prg:jnlaop:v:2013:y:2013:i:2:id:396:p:3-24

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    Related research

    Keywords: trade flows; panel models; identification problem; heterogeneity problem; Gravity model; endogeneity problem; assumption of variables;

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    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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