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The use of gravity models in the identification of the factors determining trade flows in the European Union

Author

Listed:
  • Michal Bernard Pietrzak

    (Nicolaus Copernicus University, Nicolaus Copernicus University, Poland)

  • Justyna Lapinska

    (Nicolaus Copernicus University, Nicolaus Copernicus University, Poland)

Abstract

The article analyzes the impact of potential determinants on the level of trade volume between the member states of the European Union. As a result of the use of gravity model for panel data the identification of a significant impact of the size of the economies of the member states, their level of economic development, foreign direct investment, the level of the so-called trade freedom of countries and of significant differences in the level of economic development between trading partners on the level of their bilateral trade. Also, it confirmed the existence of a negative relationship between the geographical distance and the size of the countries and their mutual exchange and a significant increase in the level of exports, both from the EU-12 to EU-15, and vice versa.

Suggested Citation

  • Michal Bernard Pietrzak & Justyna Lapinska, 2014. "The use of gravity models in the identification of the factors determining trade flows in the European Union," Working Papers 8/2014, Institute of Economic Research, revised May 2014.
    • Handle: RePEc:pes:wpaper:2014:no8
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    Citations

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    Cited by:

    1. Čipkutė Eivilė, 2016. "The Gravity Model for Assessing Trade Patterns: The Case of Baltic States," Ekonomika (Economics), Sciendo, vol. 95(3), pages 81-97, December.

    More about this item

    Keywords

    international trade; the European Union; a gravity model;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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