Detail publikace

On Estimation of Gravity Equation: a Cluster Analysis

Autor: Mgr. Božena Bobková ,
Typ: IES Working Papers
Rok: 2014
Číslo: 37
Publikováno v: IES Working Papers 37/2014
Místo vydání: Prague
Klíčová slova: gravity model, K-mean clustering, Germany, slope heterogeneity
JEL kódy: C23, C45, F10, F14
Citace: Bobková B. (2014). “On Estimation of Gravity Equation: a Cluster Analysis” IES Working Paper 37/2014. IES FSV. Charles University.
Granty: GAČR č. P402/12/0982: Trade Flows in Times of Economic Boom and Slump: Modifying the Gravity Model for Country, Time and Product-Specific Decision-Making
Abstrakt: This article questions the slope homogeneity in a gravity equation and proposes a partially heterogeneous framework for its estimation using panel data. We suggest to employ K-mean clustering to group countries according to the gravity equation variables. Further, the gravity model is estimated on these created homogeneous groups. We apply this procedure on analysis of German trade data and confirm the slope heterogeneity in the model. When we estimate the model on each cluster separately, the estimated coefficients and their standard errors vary sufficiently. Moreover, we show that the pooled estimation technique severely under- or overestimate the effect of given variables.
Ke stažení: wp_2014_37_Bobkova


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