Quotation Krisztin, Tamas, Fischer, Manfred M. 2016. The gravity model for international trade: Specification and estimation issues. 56th Congress of the ERSA, Vienna, Österreich, 23.08.-26.08.2016.




The Poisson gravity model along with pseudo ML methods has become a popular way to model international trade flows. This approach has several econometric advantages that we outline in the paper. We argue that estimating the parameters by ML would only be justified statistically if the trade flows were independent. Such an assumption, however, is generally not valid, and a failure to account for spatial dependence may lead to biased parameter estimates and misleading inferences. To overcome this estimation problem we suggest eigenvector spatial filtering variants of the Poisson gravity model (without and with zero-inflation) along with pseudo ML estimation.


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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Paper presented at an academic conference or symposium
Language English
Title The gravity model for international trade: Specification and estimation issues
Event 56th Congress of the ERSA
Year 2016
Date 23.08.-26.08.2016
Country Austria
Location Vienna
URL http://http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2580230


Fischer, Manfred M. (Details)
Krisztin, Tamas (IIASA, Austria)
Institute for Economic Geography and GIScience IN (Details)
Research areas (ÖSTAT Classification 'Statistik Austria')
1807 Economic geography (Details)
1810 Geographic Information Systems (GIS) (Details)
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