New nonlinear estimators of the gravity equation

Mnasri, Ayman; Nechi, Salem

doi:10.1016/j.econmod.2020.12.011

Cited by 13 publications

(8 citation statements)

References 35 publications

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“…Our results reveal that a 1% increase in the distance reduces trade flow, from −0.43%, −0.54% to −0.11%. These results are consistent with the existing literature on the gravity model analysis (Mnasri and Nechi, 2021; Frede and Yetkiner, 2017).…”

Section: Estimation and Interpretation Of Resultssupporting

confidence: 93%

Should Bangladesh join Regional Comprehensive Economic Partnership (RCEP)? The gravity explanation of Bangladesh dilemma

Goswami

Khan

Labiba

et al. 2022

IJOEM

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PurposeThe scope of this work is to explore whether Regional Comprehensive Economic Partnership (RCEP) would be beneficial to Bangladesh, given Bangladesh's strong ties with India and the west.Design/methodology/approachUsing extended gravity equation and data from Head and Mayer (2021) and the Direction of Trade Statistic (IMF, 2021) for Bangladesh with its applicable partner countries from 1972 till 2019, the authors attempted to examine the potential impact of joining RCEP while keeping its relationship with South Asian Association for Regional Cooperation (SAARC), and other existing economic integration schemes intact.FindingsUsing traditional pooled ordinary least squares, two-stage least square and generalized method of moment techniques, it has been revealed that conventional partners in the South led by India are still beneficial to Bangladeshs trading line. Joining RCEP provides ample avenues for trade expansion without replacing the positive effects of SAARC.Practical implicationsTraditional partners from European, American and South Asian trading opportunities are still paying enough dividends to Bangladesh. RCEP is providing a trade-enhancing chance for Bangladesh in the eastern direction. This paper provides a policy suggestion to look east policy of government. A total overhaul of her tax structure through minimizing excessive reliance on import tariff revenue is desired to facilitate her to join RCEP in the future because most of its prospective RCEP partners are import partners.Originality/valueThis is the first and the only study which explores the feasibility of Bangladesh to join the RCEP by using the most recently updated gravity data in a panel framework.HighlightsSince its inception on November 15, 2020, Regional Comprehensive Economic Partnership (RCEP) has emerged as one of the largest economic integration areas in the world.As a borderline country between South Asia and RCEP, Bangladesh is in a fix to take a decision either to join or not to join RCEP if they are invited.This paper used the gravity equation in an extended form by taking Bangladesh with its 197 trading partners’ trade data for 1972–2019.The findings postulate that the existing relationship with SAARC countries is still beneficial to its welfare, and RCEP is also economically helpful in enhancing its trade.

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Section: Estimation and Interpretation Of Resultssupporting

confidence: 93%

Should Bangladesh join Regional Comprehensive Economic Partnership (RCEP)? The gravity explanation of Bangladesh dilemma

Goswami

Khan

Labiba

et al. 2022

IJOEM

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“…The prevalence of zero-trade values and the presence of heteroscedasticity have raised many questions about the estimation methods of the gravity model. According to the simulation results from a new study, PPML yields very good results only when there is no censoring and when error terms are log-normally distributed (Mnasri & Nechi, 2021). Empirical results show that previous studies have overestimated the contribution of variables such as importer's income, distance, remoteness, trade agreements and openness.…”

Section: Lwesya (2018) Determinants Of Leather and Leather Products Exports In Tanzaniamentioning

confidence: 90%

“…Nevertheless, some estimation practices have been subject to criticism, namely how zero-trade values and heteroscedasticity are handled in the literature. Mnasri and Nechi (2021) have proposed a new non-linear Heckman two-step (Heckman_2stp) estimator that corrects for the selection bias and avoids Jensen' simulations to assess the performance of our proposed estimators and to compare them with the other popular non-linear estimators, namely the nonlinear least squares (NLS) and PPML. These new estimation techniques and models could be applied in the study of leather trade in the future.…”

Section: Conclusion Implications and Future Researchmentioning

confidence: 99%

Determinants of Bangladesh’s Leather Exports to Its Major Trade Partners: A Panel Gravity Model Approach

Shahriar

Kea

Abdullahi

et al. 2021

Global Business Review

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The purpose of this research is to study the determinants of export, import and overall trade performance. The article employed the panel gravity model along with the analytical approaches of the fixed-effects, random-effects, Poisson Pseudo-Maximum-Likelihood (PPML) and Heckman selection models. This analysis is based on a panel data set from 1989 to 2015 (27 years) for a total of 20 selected largest leather importing partners. The findings are consistent with the Heckscher–Ohlin (H–O) theory, meaning that Bangladesh could chase for the comparative advantage in the leather industry through the effective planning and efficient utilization of its abundant population of 163 million. It is demonstrated that the wealthier nations are likely to trade in the Bangladeshi leather sector. But the key problem in the ways of trade is the presence of high trade and transport costs. Among the major causes of high-trade costs in Bangladesh are the cumbersome and complex cross-border trading practices, which also increase the possibility of corruption. Moreover, the trading of leather products is negatively influenced by the COVID-19. These problems and issues need to be addressed to facilitate Bangladesh’s leather exports. Also, Bangladesh is a founding member of China’s Belt and Road Initiative (BRI). Exporting to Chinese consumer markets and using network connectivity to boost leather trade with other participating countries in the BRI would create a considerable growth potential for Bangladesh. To this end, the issue of technological developments and research innovations could be prioritized. This work provides both industrial and policy directions for future research on trade of leather products by means of an application of the gravity model. There are some methodological innovations of the model. The concluding remarks have generated some insights and lessons that would be useful in the development of leather trade across the world.

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“…In our setting, not restricting the data to only positive values of bilateral migration avoids selection bias issues derived from accounting for only positive migration inflows. In addition, using the dependent variable in levels in the PPML model also prevents potential biases concerning Jensen's Inequality, which might hinder the interpretability of the results when the expected value of the logarithm is not equal to the logarithm of the expected value, as described by Mnasri and Nechi (2021). However, our model specification differs from the previous studies in several ways.…”

Section: Model Specificationmentioning

confidence: 99%

Climate change, natural disasters, and international migration: A country-level analysis considering climatic zones

Martínez‐Zarzoso¹,

Nowak‐Lehmann²,

Paschoaleto³

2023

Front. Clim.

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Climate change and natural disasters might increase the vulnerability of populations in affected regions. This article investigates the link between climatic events and bilateral migration from countries in the Global South to OECD countries. A gravity model is estimated using panel data techniques and bearing in mind potential sources of heterogeneity across subsamples. The main novelty is to distinguish by climatic zones, while also considering commonly used social and economic stresses, such as income levels and incidence of conflict. The analysis is based on bilateral emigration flows from 76 developing countries to OECD countries in the last decades. The results show that increasing extreme temperatures and storms in arid and semi-arid zones act as triggers of bilateral migration from South to North and that the estimated effects are non-negligible. The results are robust to a battery of tests, including dividing the sample according to the levels of conflict and poverty.

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New nonlinear estimators of the gravity equation

Cited by 13 publications

References 35 publications

Should Bangladesh join Regional Comprehensive Economic Partnership (RCEP)? The gravity explanation of Bangladesh dilemma

Should Bangladesh join Regional Comprehensive Economic Partnership (RCEP)? The gravity explanation of Bangladesh dilemma

Determinants of Bangladesh’s Leather Exports to Its Major Trade Partners: A Panel Gravity Model Approach

Climate change, natural disasters, and international migration: A country-level analysis considering climatic zones

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