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A gravity model for international trade and conflict

Author

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  • Youssef OUKHALLOU

    (University of Nottingham, UK)

Abstract

This paper investigates the nexus between conflict and trade using data from 77 countries. For this purpose, it puts forward a gravity model that is augmented with interstate conflict casualties. In order to overcome statistical problems related to heteroscedasticity and the omission of the extensive margin (the zero observations), the gravity modelis estimated using a Poisson Pseudo-Maximum Likelihood method (PPML). The model suggests a downward impact on trade that affects all sides of the conflict, whether they suffer casualties or deal them. However, said impact remains small, which hints that even before direct conflicts occur, the involved countries are less likely to have significant trade flows.

Suggested Citation

  • Youssef OUKHALLOU, 2020. "A gravity model for international trade and conflict," Journal of Economics and Political Economy, EconSciences Journals, vol. 7(3), pages 180-187, September.
    • Handle: RePEc:cvv:journ1:v:7:y:2020:i:3:p:180-187
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    References listed on IDEAS

    as
    1. Fukao, Kyoji & Ishido, Hikari & Ito, Keiko, 2003. "Vertical intra-industry trade and foreign direct investment in East Asia," Journal of the Japanese and International Economies, Elsevier, vol. 17(4), pages 468-506, December.
    2. Jeffrey A. Frankel, 1997. "Regional Trading Blocs in the World Economic System," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 72, July.
    3. Baier, Scott L. & Bergstrand, Jeffrey H., 2007. "Do free trade agreements actually increase members' international trade?," Journal of International Economics, Elsevier, vol. 71(1), pages 72-95, March.
    4. Xuepeng Liu, 2009. "GATT/WTO Promotes Trade Strongly: Sample Selection and Model Specification," Review of International Economics, Wiley Blackwell, vol. 17(3), pages 428-446, August.
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    More about this item

    Keywords

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    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions

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