IDEAS home Printed from https://ideas.repec.org/a/bla/jorssc/v70y2021i4p909-933.html
   My bibliography  Save this article

Censored regression for modelling small arms trade volumes and its ‘Forensic’ use for exploring unreported trades

Author

Listed:
  • Michael Lebacher
  • Paul W. Thurner
  • Göran Kauermann

Abstract

In this paper, we use a censored regression model to investigate data on the international trade of small arms and ammunition provided by the Norwegian Initiative on Small Arms Transfers. Taking a network‐based view on the transfers, we do not only rely on exogenous covariates but also estimate endogenous network effects. We apply a spatial autocorrelation gravity model with multiple weight matrices. The likelihood is maximized employing the Monte Carlo expectation maximization algorithm. Our approach reveals strong and stable endogenous network effects. Furthermore, we find evidence for a substantial path dependence as well as a close connection between exports of civilian and military small arms. The model is then used in a ‘forensic’ manner to analyse latent network structures and thereby to identify countries with higher or lower tendency to export or import than reflected in the data. The approach is also validated using a simulation study.

Suggested Citation

  • Michael Lebacher & Paul W. Thurner & Göran Kauermann, 2021. "Censored regression for modelling small arms trade volumes and its ‘Forensic’ use for exploring unreported trades," Journal of the Royal Statistical Society Series C, Royal Statistical Society, vol. 70(4), pages 909-933, August.
    • Handle: RePEc:bla:jorssc:v:70:y:2021:i:4:p:909-933
    DOI: 10.1111/rssc.12491
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/rssc.12491
    Download Restriction: no
    File URL: https://libkey.io/10.1111/rssc.12491?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Giorgio Fagiolo & Javier Reyes & Stefano Schiavo, 2010. "The evolution of the world trade web: a weighted-network analysis," Journal of Evolutionary Economics, Springer, vol. 20(4), pages 479-514, August.
    2. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
    3. Eaton Jonathan & Tamura Akiko, 1994. "Bilateralism and Regionalism in Japanese and U.S. Trade and Direct Foreign Investment Patterns," Journal of the Japanese and International Economies, Elsevier, vol. 8(4), pages 478-510, December.
    4. Franzese, Robert J. & Hays, Jude C., 2007. "Spatial Econometric Models of Cross-Sectional Interdependence in Political Science Panel and Time-Series-Cross-Section Data," Political Analysis, Cambridge University Press, vol. 15(2), pages 140-164, April.
    5. Anne-Célia Disdier & Keith Head, 2008. "The Puzzling Persistence of the Distance Effect on Bilateral Trade," The Review of Economics and Statistics, MIT Press, vol. 90(1), pages 37-48, February.
    6. Hoff P.D. & Raftery A.E. & Handcock M.S., 2002. "Latent Space Approaches to Social Network Analysis," Journal of the American Statistical Association, American Statistical Association, vol. 97, pages 1090-1098, December.
    7. Eaton, Jonathan & Kortum, Samuel, 2001. "Trade in capital goods," European Economic Review, Elsevier, vol. 45(7), pages 1195-1235.
    8. Peter Egger & Kevin Staub, 2016. "GLM estimation of trade gravity models with fixed effects," Empirical Economics, Springer, vol. 50(1), pages 137-175, February.
    9. Assaf Almog & Rhys Bird & Diego Garlaschelli, 2015. "Enhanced Gravity Model of trade: reconciling macroeconomic and network models," Papers 1506.00348, arXiv.org, revised Feb 2019.
    10. Head, Keith & Mayer, Thierry, 2014. "Gravity Equations: Workhorse,Toolkit, and Cookbook," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 131-195, Elsevier.
    11. Vincenzo Bove & Claudio Deiana & Roberto Nistic�, 2018. "Global Arms Trade and Oil Dependence," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 34(2), pages 272-299.
    12. Bivand, Roger & Piras, Gianfranco, 2015. "Comparing Implementations of Estimation Methods for Spatial Econometrics," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 63(i18).
    13. James P. LeSage & R. Kelley Pace, 2008. "Spatial Econometric Modeling Of Origin‐Destination Flows," Journal of Regional Science, Wiley Blackwell, vol. 48(5), pages 941-967, December.
    14. Garlaschelli, Diego & Loffredo, Maria I., 2005. "Structure and evolution of the world trade network," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 355(1), pages 138-144.
    15. Matteo Barigozzi & Giorgio Fagiolo & Diego Garlaschelli, 2009. "Multinetwork of international trade: A commodity-specific analysis," Papers 0908.1879, arXiv.org, revised Jun 2010.
    16. Elhanan Helpman & Marc Melitz & Yona Rubinstein, 2008. "Estimating Trade Flows: Trading Partners and Trading Volumes," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 123(2), pages 441-487.
    17. Gopinath, G. & Helpman, . & Rogoff, K. (ed.), 2014. "Handbook of International Economics," Handbook of International Economics, Elsevier, edition 1, volume 4, number 4.
    18. Z. I. Botev, 2017. "The normal law under linear restrictions: simulation and estimation via minimax tilting," Journal of the Royal Statistical Society Series B, Royal Statistical Society, vol. 79(1), pages 125-148, January.
    19. Ward, Michael D. & Ahlquist, John S. & Rozenas, Arturas, 2013. "Gravity's Rainbow: A dynamic latent space model for the world trade network," Network Science, Cambridge University Press, vol. 1(1), pages 95-118, April.
    20. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, December.
    21. James Paul LeSage & Manfred M. Fischer, 2020. "Cross-sectional dependence model specifications in a static trade panel data setting," Journal of Geographical Systems, Springer, vol. 22(1), pages 5-46, January.
    22. Bruce A Desmarais & Skyler J Cranmer, 2012. "Statistical Inference for Valued-Edge Networks: The Generalized Exponential Random Graph Model," PLOS ONE, Public Library of Science, vol. 7(1), pages 1-12, January.
    23. Florence Metz & Karin Ingold, 2017. "Politics of the precautionary principle: assessing actors’ preferences in water protection policy," Policy Sciences, Springer;Society of Policy Sciences, vol. 50(4), pages 721-743, December.
    24. Eric Zitzewitz, 2012. "Forensic Economics," Journal of Economic Literature, American Economic Association, vol. 50(3), pages 731-769, September.
    25. D. Garlaschelli & M. I. Loffredo, 2005. "Structure and Evolution of the World Trade Network," Papers physics/0502066, arXiv.org, revised May 2005.
    26. LeSage, James P. & Fischer, Manfred M., 2019. "Conventional versus network dependence panel data gravity model specifications," Working Papers in Regional Science 2019/02, WU Vienna University of Economics and Business.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Scott L. Baier & Amanda Kerr & Yoto V. Yotov, 2018. "Gravity, distance, and international trade," Chapters, in: Bruce A. Blonigen & Wesley W. Wilson (ed.), Handbook of International Trade and Transportation, chapter 2, pages 15-78, Edward Elgar Publishing.
    2. Di Vece, Marzio & Garlaschelli, Diego & Squartini, Tiziano, 2023. "Reconciling econometrics with continuous maximum-entropy network models," Chaos, Solitons & Fractals, Elsevier, vol. 166(C).
    3. Head, Keith & Mayer, Thierry, 2014. "Gravity Equations: Workhorse,Toolkit, and Cookbook," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 131-195, Elsevier.
    4. Chen, Mingli & Fernández-Val, Iván & Weidner, Martin, 2021. "Nonlinear factor models for network and panel data," Journal of Econometrics, Elsevier, vol. 220(2), pages 296-324.
    5. Piermartini, Roberta & Yotov, Yoto, 2016. "Estimating Trade Policy Effects with Structural Gravity," School of Economics Working Paper Series 2016-10, LeBow College of Business, Drexel University.
    6. Marco Dueñas & Giorgio Fagiolo, 2013. "Modeling the International-Trade Network: a gravity approach," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 8(1), pages 155-178, April.
    7. Mariam Camarero & Sergi Moliner & Cecilio Tamarit, 2021. "Is there a euro effect in the drivers of US FDI? New evidence using Bayesian model averaging techniques," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 157(4), pages 881-926, November.
    8. Wessel, Jan, 2019. "Evaluating the transport-mode-specific trade effects of different transport infrastructure types," Transport Policy, Elsevier, vol. 78(C), pages 42-57.
    9. Martin, Will, 2020. "Making Gravity Great Again," 2020: Economic Implications of COVID-19, December 14-15, Virtual Platform 339376, International Agricultural Trade Research Consortium.
    10. Juliana D. Araujo & Povilas Lastauskas & Chris Papageorgiou, 2017. "Evolution of Bilateral Capital Flows to Developing Countries at Intensive and Extensive Margins," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 49(7), pages 1517-1554, October.
    11. Stacy Julius & Nnanna P. Azu & Maimuna Y. Muhammad, 2019. "Assessing the Impact of Terrorism in Trade Development in the SADC Region: A Gravity Model Approach," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 9(10), pages 1147-1159, October.
    12. Anderson, James E. & Yotov, Yoto V., 2020. "Short run gravity," Journal of International Economics, Elsevier, vol. 126(C).
    13. Glenn Magerman & Karolien De Bruyne & Jan Van Hove, 2020. "Pecking order and core‐periphery in international trade," Review of International Economics, Wiley Blackwell, vol. 28(4), pages 1113-1141, September.
    14. Anderson, James E. & Borchert, Ingo & Mattoo, Aaditya & Yotov, Yoto V., 2018. "Dark costs, missing data: Shedding some light on services trade," European Economic Review, Elsevier, vol. 105(C), pages 193-214.
    15. Bergstrand, Jeffrey H. & Larch, Mario & Yotov, Yoto V., 2015. "Economic integration agreements, border effects, and distance elasticities in the gravity equation," European Economic Review, Elsevier, vol. 78(C), pages 307-327.
    16. Rodolfo Metulini & Roberto Patuelli & Daniel A. Griffith, 2018. "A Spatial-Filtering Zero-Inflated Approach to the Estimation of the Gravity Model of Trade," Econometrics, MDPI, vol. 6(1), pages 1-15, February.
    17. Brei, Michael & von Peter, Goetz, 2018. "The distance effect in banking and trade," Journal of International Money and Finance, Elsevier, vol. 81(C), pages 116-137.
    18. Bas, Maria & Mayer, Thierry & Thoenig, Mathias, 2017. "From micro to macro: Demand, supply, and heterogeneity in the trade elasticity," Journal of International Economics, Elsevier, vol. 108(C), pages 1-19.
    19. Nobi, Ashadun & Lee, Tae Ho & Lee, Jae Woo, 2020. "Structure of trade flow networks for world commodities," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 556(C).
    20. repec:hal:wpspec:info:hdl:2441/dambferfb7dfprc9m01g1j1k2 is not listed on IDEAS
    21. repec:hal:spmain:info:hdl:2441/dambferfb7dfprc9m01g1j1k2 is not listed on IDEAS
    22. repec:spo:wpecon:info:hdl:2441/dambferfb7dfprc9m01g1j1k2 is not listed on IDEAS
    23. Shumilov, Andrei, 2016. "Особенности Оценивания Гравитационных Моделей Международной Торговли [Estimating Gravity Models of International Trade: A Survey]," MPRA Paper 75371, University Library of Munich, Germany.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jorssc:v:70:y:2021:i:4:p:909-933. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/rssssea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.