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| Author: | Matyas, L. |
| Title: | Proper econometric specification of the gravity model |
| Journal: | World Economy
1997 : MAY, VOL. 20:3, p. 363-368 |
| Index terms: | ECONOMETRICS MODELS ECONOMICS |
| Language: | eng |
| Abstract: | Modelling and predicting foreign trade flows has long been an important task in international economics. One of the most fruitful ways to formalise this has been through the use of gravity type models. These models have also been used to show the (statistical) significance of trading blocs and economic areas like the APEC, MERCOSUR, NAFTA, etc. This practice was criticised in a recent paper by Polak (1996), who pointed out the ambiguity of using regional dummy variable(s) to test the hypothesis that trading blocs have a significant role in explaining the volume of exports and also, suggested an alternative specification to salvage this model. |
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