Econometric Models - Gravity Model of Trade, Econometric Model, Policy Simulation Model, Pensim2, Distributed Lag (Paperback)

Chapters: Gravity Model of Trade, Econometric Model, Policy Simulation Model, Pensim2, Distributed Lag. Source: Wikipedia. Pages: 26. Not illustrated. Free updates online. Purchase includes a free trial membership in the publisher's book club where you can select from more than a million books without charge. Excerpt: The gravity model of trade in international economics, similar to other gravity models in social science, predicts bilateral trade flows based on the economic sizes of (often using GDP measurements) and distance between two units. The model was first used by Tinbergen in 1962. The basic theoretical model for trade between two countries (i and j) takes the form of: Where F is the trade flow, M is the economic mass of each country, D is the distance and G is a constant. The model has also been used in international relations to evaluate the impact of treaties and alliances on trade, and it has been used to test the effectiveness of trade agreements and organizations such as the North American Free Trade Agreement (NAFTA) and the World Trade Organization (WTO). The model has been an empirical success, but the theoretical justifications for the model are the subject of some dispute. The model clearly has a relationship with a geographic view of trade, but other theoretical justifications for the model have also been proposed. The gravity model estimates the pattern of international trade. While the models basic form consists of factors that have more to do with geography and spatiality, the gravity model has been used to test hypotheses rooted in purer economic theories of trade as well. One such theory predicts that trade will be based on relative factor abundances. One of the common relative factor abundance models is the Heckscher-Ohlin model. This theory would predict that trade patterns would be based on relative factor abundance. Those countries with a relative abundance of one factor would be expected to pr...More: http: //booksllc.net/?id=345832