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Gravity model analysis: robust evidence from the Czech Republic and corruption matching

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  • Michal Paulus

    () (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nábreží 6, 111 01 Prague 1, Czech Republic)

  • Eva Michalíková

    (Brno University of technoglogy, Brno and Anglo-American University, Prague)

Abstract

The results generally confirm that Czech trade is oriented towards European countries and determined primarily by key economic factors of domestic and foreign GDP. The institutional variables remain largely insignificant, except corruption due tothe counterintuitive result that a higher corruption level in partner country should boost mutual trade. We interpret this finding as a result of “corruption matching”. The exclusion of outliers (LTS) significantly increases R-square and extends the number of significant determining factors (e.g. population or other institutional variables). The outliers, according to the LTS, are composed mainly of African, Asia and South or Central America states.

Suggested Citation

  • Michal Paulus & Eva Michalíková, 2014. "Gravity model analysis: robust evidence from the Czech Republic and corruption matching," Working Papers IES 2014/32, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Sep 2014.
  • Handle: RePEc:fau:wpaper:wp2014_32
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    File URL: http://ies.fsv.cuni.cz/sci/publication/show/id/5200/lang/cs
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    1. repec:ers:journl:v:xxii:y:2019:i:2:p:265-281 is not listed on IDEAS

    More about this item

    Keywords

    Czech Republic; export; gravity model; fixed effects; LSDV; least trimmed squares;

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F10 - International Economics - - Trade - - - General
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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