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The gravity model analysis: an application on MERCOSUR trade flows

Author

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  • Eduardo Cuenca García
  • Margarita Navarro Pabsdorf
  • Estrella Gómez Herrera

Abstract

This paper explores the determinants of bilateral trade flows between Mercosur countries. To this aim, a gravity model is applied to annual bilateral exports between 75 countries in 1980–2008. The model is augmented with variables that are relevant in determining the volume and direction of international trade using two alternative estimation methods; pooled ordinary least squares and panel fixed effects. The results reveal that the influence of the agreement on trade has been positive but moderate. As a whole, Mercosur has had positive effects, and this agreement can be reinforced with the deepening of their relationships and the entry of new members.

Suggested Citation

  • Eduardo Cuenca García & Margarita Navarro Pabsdorf & Estrella Gómez Herrera, 2013. "The gravity model analysis: an application on MERCOSUR trade flows," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 16(4), pages 336-348, December.
    • Handle: RePEc:taf:jecprf:v:16:y:2013:i:4:p:336-348
    DOI: 10.1080/17487870.2013.846857
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    Cited by:

    1. Li, Baihua & Li, Huajiao & Dong, Zhiliang & Lu, Yu & Liu, Nairong & Hao, Xiaoqing, 2021. "The global copper material trade network and risk evaluation: A industry chain perspective," Resources Policy, Elsevier, vol. 74(C).
    2. Sanjeev Vasudevan & M. Suresh Babu, 2021. "Global production sharing and trade effects: an analysis of Eurasian Economic Union," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 11(4), pages 633-665, December.
    3. Wang, Xingxing & Li, Huajiao & Yao, Huajun & Chen, Zhihua & Guan, Qing, 2019. "Network feature and influence factors of global nature graphite trade competition," Resources Policy, Elsevier, vol. 60(C), pages 153-161.
    4. Ayman El Dahrawy Sánchez‐Albornoz & Jacopo Timini, 2021. "Trade agreements and Latin American trade (creation and diversion) and welfare," The World Economy, Wiley Blackwell, vol. 44(7), pages 2004-2040, July.
    5. Irena Mikolajun & Jean-Marie Viaene, 2015. "Trade, Factor Mobility and the Extent of Economic Integration: Theory and Evidence," CESifo Working Paper Series 5481, CESifo.
    6. Irena Mikolajun & Jean-Marie Viaene, 2015. "Trade, Factor Mobility and the Extent of Economic Integration: Theory and Evidence," Tinbergen Institute Discussion Papers 15-096/VI, Tinbergen Institute.
    7. Wong, Colin Koh King & Liew, Venus Khim-Sen & Arip, Mohammad Affendy, 2021. "The Effects of ASEAN Economic Community (AEC) Blueprint Adoption on Intra-ASEAN Trade on Manufacturing Products," MPRA Paper 107983, University Library of Munich, Germany.
    8. Rodolfo Campos & Jacopo Timini, 2019. "An estimation of the effects of Brexit on trade and migration," Occasional Papers 1912, Banco de España.
    9. Frederik Stender, 2018. "MERCOSUR in gravity: an accounting approach to analyzing its trade effects," International Economics and Economic Policy, Springer, vol. 15(2), pages 501-522, April.
    10. My Duong & Mark J. Holmes & Anna Strutt & Steven Lim, 2019. "Effects of Trade Agreements and Foreign Direct Investment on Trade: Evidence from Vietnam," International Journal of Economics and Financial Issues, Econjournals, vol. 9(3), pages 116-126.

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