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Trade Effects Estimation for the Case of Eurasian Economic Space Countries: Application of Regional Gravity Model

Author

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  • Mogilat, A.

    (Institute of Economic Forecasting Russian Academy of Sciences, Moscow, Russia
    Center for Macroeconomic Analysis and Short-Term Forecasting, Moscow, Russia)

  • Salnikov, V.

    (Institute of Economic Forecasting Russian Academy of Sciences, Moscow, Russia
    Center for Macroeconomic Analysis and Short-Term Forecasting, Moscow, Russia)

Abstract

The article develops a methodology of manufactured goods trade effects estimation for the case of Eurasian Economic Space (EES) Countries (Russia, Belarus and Kazakhstan). The approach is based on projection of intra-country trade gravity model estimates on trade within EES countries. We consider the "border puzzle" in trade to be an extra long-term effect of integration. The model is estimated using data on manufactured goods trade between Russian regions in 2012. We provide a comparative analysis of a wide range of econometric approaches, including simultaneous-quantile regression, scarcely used before for gravity model estimation. As a result, we choose a model, which provides the best fit between actual volumes of trade between regions and the model-based ones. We have shown, that Poisson pseudo-maximum likelihood estimator provides the highest accuracy of estimates. According to our estimates the highest increase of trade is expected for trade flows between Belarus and Russia, as well as for Russian export to Kazakhstan.

Suggested Citation

  • Mogilat, A. & Salnikov, V., 2015. "Trade Effects Estimation for the Case of Eurasian Economic Space Countries: Application of Regional Gravity Model," Journal of the New Economic Association, New Economic Association, vol. 27(3), pages 80-108.
    • Handle: RePEc:nea:journl:y:2015:i:27:p:80-108
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    References listed on IDEAS

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    Cited by:

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    More about this item

    Keywords

    gravity model; Poisson estimator; regions of Russia; Eurasian Economic Space; border puzzle; integration;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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