Work detail

Gravity model estimation using panel data

Author: Mgr. Božena Bobková
Year: 2012 - winter
Leaders: doc. Ing. Vladimír Benáček CSc.
Consultants:
Work type: Economic Theory
Masters
Language: English
Pages: 58
Awards and prizes: M.A. with distinction from the Dean of the Faculty of Social Sciences for an excellent state-final examination performance.
Link:
Abstract: This thesis investigates the question if the estimation of gravity model of in-
ternational trade based on the logarithmic transformation of the model is ad-
visable when panel data are employed for the estimation. We have derived
theoretically that in the presence of heteroskedasticity the logarithmic trans-
formation causes inconsistency of the estimated coefficients. According to the
literature, we have recommended rather the Poisson pseudo maximum likeli-
hood estimation technique for the empirical research of the gravity model. We
have also provided an empirical analysis of Czech and German panel data sets
based on the comparison of the performance of traditional and Poisson estima-
tion approaches. This analysis confirrms Poisson pseudo maximum likelihood
estimation method as a more proper method for estimating the coefficients of
the gravity equation.
Downloadable: Diploma Thesis of Bobková
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