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Determinants Of Intra-Industry Trade: An Investigation With Bma For The European Union

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  • Krzysztof Beck

    (Lazarski University)

Abstract

The empirical literature on the determinants of intra-industry trade (IIT) is vast and comprehensive, yet as authors failed to properly account for model uncertainty it has brought inconsistent and conflicting results. To resolve this issue, Bayesian model averaging was applied to investigate the robustness of 48 potential determinants of bilateral IIT for the panel of 26 European Union countries over the 1999-2011 period. Application of BMA demonstrated that 11 of them are robust determinants of IIT, namely real GDP products, trade openness, membership in the European Union and the Euro area, corruption, and differences in factor abundance. Among the factors of production, the key role in the determination of IIT patterns can be assigned to the differences in human capital. Yet, transportation cost and cultural similarity have no impact on the IIT patterns.

Suggested Citation

  • Krzysztof Beck, 2018. "Determinants Of Intra-Industry Trade: An Investigation With Bma For The European Union," CBU International Conference Proceedings, ISE Research Institute, vol. 6(0), pages 46-52, September.
    • Handle: RePEc:aad:iseicj:v:6:y:2018:i:0:p:46-52
    DOI: 10.12955/cbup.v6.1131
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    References listed on IDEAS

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    1. Ley, Eduardo & Steel, Mark F.J., 2012. "Mixtures of g-priors for Bayesian model averaging with economic applications," Journal of Econometrics, Elsevier, vol. 171(2), pages 251-266.
    2. Krzysztof Beck, 2017. "Bayesian Model Averaging And Jointness Measures: Theoretical Framework And Application To The Gravity Model Of Trade," Statistics in Transition New Series, Polish Statistical Association, vol. 18(3), pages 393-412, September.
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    More about this item

    Keywords

    intra-industry tradeBayesian model averaging; European Union;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F15 - International Economics - - Trade - - - Economic Integration
    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General

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