An analysis of trade flows in the Philippines using the gravity model
Date
2011-10
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Abstract
This paper applied the Gravity Model of International Trade to approximate the total volume of trade ( defmed as the total exports plus total imports in current prices) exchanged by the Philippines with its top The partners. The basic gravity model was used, where the explanatory variables are the economic/market size of the trading countries and Hence, distance between them. Hence, Gross Domestic Product are Gross Domestic In
addition, (GDP) and distance. In addition, other important variables were added, Two types population Ordinary Least Squares Two types of Ordinary Time Squares (OLS) regressions were employed: Time series regression (1980-2009) and cross sectional regression for the The
, 1981, 1988, 1995, 2002, and 2009. The Philippine results indicate that the gravity model in The setting follow the typical results of previous studies. The Philippines variables that best explain trade flows of the The are the GDP of the importing Population and distance. The elasticity of the importers' GDP and Population to trade volume in the cross-sectional regression show little fluctuation over the years.
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Keywords
Gravity Model, Trade Volume, Trade Flow, GDP, Population, Distance, Exchange Rates