IDEAS home Printed from https://ideas.repec.org/a/eee/forpol/v172y2025ics138993412500036x.html
   My bibliography  Save this article

An evaluation of gravity models and artificial neuronal networks on bilateral trade flows in wood markets

Author

Listed:
  • Morland, Christian
  • Tandetzki, Julia
  • Schier, Franziska

Abstract

Trade fuels economic development in interwoven international wood markets, while economic shocks and structural changes jolt market response behavior. In this context, both accurate predictions and forecasts of trade flows and a deep understanding of their influencing factors are essential for policymakers and stakeholders to enhance economic planning and decision-making affecting trade policies. A popular method for analyzing bilateral trade flows is the deterministic Gravity model of trade due to its intuitive design and effectiveness. However, data-driven machine learning methods such as artificial neural networks (ANN) could enhance the accuracy of deterministic modeling approaches through their complex and potentially nonlinear nature. To the best of our knowledge, no study exists that uses an ANN approach to assess bilateral trade for different wood-based products was. Therefore, it remains unclear whether ANN is an appropriate method to predict and forecast trade flows in forest product markets or if Gravity models of trade might yield better results. This study compares the ability of Gravity models and feedforward neuronal networks (FFNN) to predict existing and forecast future bilateral trade flows of four main product categories in international wood product markets. Our findings highlight that it is essential to consider the purpose of the analysis alongside the specific product group under investigation. The FFNN approach outperforms Gravity models for predicting past and present trade flows, delivering more accurate predictions across all product categories. Looking at the accuracy of forecast, we see that the superiority of FFNNs is present but decreases as the forecast horizon increases.

Suggested Citation

  • Morland, Christian & Tandetzki, Julia & Schier, Franziska, 2025. "An evaluation of gravity models and artificial neuronal networks on bilateral trade flows in wood markets," Forest Policy and Economics, Elsevier, vol. 172(C).
  • Handle: RePEc:eee:forpol:v:172:y:2025:i:c:s138993412500036x
    DOI: 10.1016/j.forpol.2025.103457
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S138993412500036X
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.forpol.2025.103457?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
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. 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.
    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. Kallio, A. Maarit I., 2021. "Wood-based textile fibre market as part of the global forest-based bioeconomy," Forest Policy and Economics, Elsevier, vol. 123(C).
    4. György Ruzicska & Ramzi Chariag & Olivér Kiss & Miklós Koren, 2024. "Can Machine Learning Beat Gravity in Flow Prediction?," Advanced Studies in Theoretical and Applied Econometrics, in: Laszlo Matyas (ed.), The Econometrics of Multi-dimensional Panels, edition 2, chapter 0, pages 511-545, Springer.
    5. Abrishami, Ali & Aliakbary, Sadegh, 2019. "Predicting citation counts based on deep neural network learning techniques," Journal of Informetrics, Elsevier, vol. 13(2), pages 485-499.
    6. Hill, Tim & Marquez, Leorey & O'Connor, Marcus & Remus, William, 1994. "Artificial neural network models for forecasting and decision making," International Journal of Forecasting, Elsevier, vol. 10(1), pages 5-15, June.
    7. Gaulier, Guillaume & Zignago, Soledad, 2004. "Notes on BACI (analytical database of international trade). 1989-2002 version," MPRA Paper 32401, University Library of Munich, Germany.
    8. Prakash Nepal & Craig M. T. Johnston & Indroneil Ganguly, 2021. "Effects on Global Forests and Wood Product Markets of Increased Demand for Mass Timber," Sustainability, MDPI, vol. 13(24), pages 1-26, December.
    9. Nasrullah, Muhammad & Chang, Liu & Khan, Khalid & Rizwanullah, Muhammad & Zulfiqar, Farah & Ishfaq, Muhammad, 2020. "Determinants of forest product group trade by gravity model approach: A case study of China," Forest Policy and Economics, Elsevier, vol. 113(C).
    10. Solberg, Birger & Moiseyev, Alex & Hansen, Jon Øvrum & Horn, Svein Jarle & Øverland, Margareth, 2021. "Wood for food: Economic impacts of sustainable use of forest biomass for salmon feed production in Norway," Forest Policy and Economics, Elsevier, vol. 122(C).
    11. Bennedsen, Mikkel & Hillebrand, Eric & Jensen, Sebastian, 2023. "A neural network approach to the environmental Kuznets curve," Energy Economics, Elsevier, vol. 126(C).
    12. Valentin Mathieu & Jean-Marc Roda, 2023. "A meta-analysis on wood trade flow modeling concepts," Post-Print hal-04150977, HAL.
    13. Mathieu, Valentin & Roda, Jean-Marc, 2023. "A meta-analysis on wood trade flow modeling concepts," Forest Policy and Economics, Elsevier, vol. 149(C).
    14. Breusch, T S & Pagan, A R, 1979. "A Simple Test for Heteroscedasticity and Random Coefficient Variation," Econometrica, Econometric Society, vol. 47(5), pages 1287-1294, September.
    15. Melitz, Jacques, 2008. "Language and foreign trade," European Economic Review, Elsevier, vol. 52(4), pages 667-699, May.
    16. Buongiorno, Joseph, 2015. "Monetary union and forest products trade – The case of the euro," Journal of Forest Economics, Elsevier, vol. 21(4), pages 238-249.
    17. Munisamy Gopinath & Feras A. Batarseh & Jayson Beckman, 2020. "Machine Learning in Gravity Models: An Application to Agricultural Trade," NBER Working Papers 27151, National Bureau of Economic Research, Inc.
    18. Buongiorno, Joseph & Johnston, Craig, 2018. "Effects of parameter and data uncertainty on long-term projections in a model of the global forest sector," Forest Policy and Economics, Elsevier, vol. 93(C), pages 10-17.
    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. Melitz, Jacques & Toubal, Farid, 2014. "Native language, spoken language, translation and trade," Journal of International Economics, Elsevier, vol. 93(2), pages 351-363.
    2. Rindler, Michael, 2021. "Changing Language Skills and Trade in Europe," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242449, Verein für Socialpolitik / German Economic Association.
    3. Frensch, Richard & Fidrmuc, Jarko & Rindler, Michael, 2023. "Topography, borders, and trade across Europe," Journal of Comparative Economics, Elsevier, vol. 51(3), pages 816-832.
    4. Christian Elleby & Wusheng Yu & Qian Yu, 2018. "The Chinese Export Displacement Effect Revisited," IFRO Working Paper 2018/02, University of Copenhagen, Department of Food and Resource Economics.
    5. Agnès Bénassy‐Quéré & Matthieu Bussière & Pauline Wibaux, 2021. "Trade and currency weapons," Review of International Economics, Wiley Blackwell, vol. 29(3), pages 487-510, August.
    6. Weidner, Martin & Zylkin, Thomas, 2021. "Bias and consistency in three-way gravity models," Journal of International Economics, Elsevier, vol. 132(C).
    7. Suárez-Varela, Marta & Rodríguez-Crespo, Ernesto, 2022. "Is dirty trade concentrating in more polluting countries? Evidence from Africa," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 728-744.
    8. Mehl, Arnaud & Sabbadini, Giulia & Schmitz, Martin & Tille, Cédric, 2024. "Distance(s) and the volatility of international trade(s)," European Economic Review, Elsevier, vol. 167(C).
    9. repec:edn:sirdps:417 is not listed on IDEAS
    10. Flach, Lisandra & Unger, Florian, 2022. "Quality and gravity in international trade," Journal of International Economics, Elsevier, vol. 137(C).
    11. 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.
    12. Antoine Berthou & Hélène Ehrhart, 2017. "Trade networks and colonial trade spillovers," Review of International Economics, Wiley Blackwell, vol. 25(4), pages 891-923, September.
    13. Anne-Célia Disdier & Silvio Tai & Lionel Fontagné & Thierry Mayer, 2010. "Bilateral trade of cultural goods," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(4), pages 575-595, January.
    14. Bailey, Michael & Gupta, Abhinav & Hillenbrand, Sebastian & Kuchler, Theresa & Richmond, Robert & Stroebel, Johannes, 2021. "International trade and social connectedness," Journal of International Economics, Elsevier, vol. 129(C).
    15. Jacques Melitz, 2014. "English as a Global Language," Working Papers 2014-22, Center for Research in Economics and Statistics.
    16. Umana-Dajud, Camilo, 2019. "Do visas hinder international trade in goods?," Journal of Development Economics, Elsevier, vol. 140(C), pages 106-126.
    17. Estrades, Carmen, 2015. "The Role of Export Restrictions in Agriculture Trade," 2015: Trade and Societal Well-Being, December 13-15, 2015, Clearwater Beach, Florida 229229, International Agricultural Trade Research Consortium.
    18. Peter R. Herman, 2022. "Correction to: Modeling complex network patterns in international trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 158(2), pages 713-714, May.
    19. Abeliansky, Ana L. & Hilbert, Martin, 2017. "Digital technology and international trade: Is it the quantity of subscriptions or the quality of data speed that matters?," Telecommunications Policy, Elsevier, vol. 41(1), pages 35-48.
    20. Paolo Sgrignoli & Rodolfo Metulini & Zhen Zhu & Massimo Riccaboni, 2017. "The Indirect Effects of FDI on Trade: A Network Perspective," Papers 1705.02187, arXiv.org.
    21. Gokmen, Gunes, 2017. "Clash of civilizations and the impact of cultural differences on trade," Journal of Development Economics, Elsevier, vol. 127(C), pages 449-458.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    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:eee:forpol:v:172:y:2025:i:c:s138993412500036x. 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: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/forpol .

    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.