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An analysis of EU wine trade: A gravity model approach

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  • Dana Dascal
  • Konstadinos Mattas
  • Vangelis Tzouvelekas

Abstract

In this research study, a gravity model approach was used in order to analyze the main factors affecting the trade flows of wine in the EU. The empirical model was applied using data for the first twelve EU countries for the period 1989–97. It has been clearly shown in the empirical literature that gravity models can be successfully applied to a single commodity market. The present study utilized pooled cross-sectional and time series data in a one-way fixed effects model that accounted for country-pair heterogeneity. The results revealed that wine trade was positively influenced by an increase in GDP per capita, since greater income promotes trade. The remoteness of one country from another influenced exports positively and imports negatively, and the quantities traded did not prove to be very sensitive to wine prices. The depreciation of EU currencies and the high production of wine in the EU increased exports and reduced imports, while EU integration enhanced trade among members. Copyright International Atlantic Economic Society 2002

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  • Dana Dascal & Konstadinos Mattas & Vangelis Tzouvelekas, 2002. "An analysis of EU wine trade: A gravity model approach," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 8(2), pages 135-147, May.
  • Handle: RePEc:kap:iaecre:v:8:y:2002:i:2:p:135-147:10.1007/bf02295344
    DOI: 10.1007/BF02295344
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