Gravity model of trade: the case of Serbia

Marina Lazarević

Diplomová práce

Anotace:

The main objective of this thesis is to examine the major factors of Serbia’s foreign trade in order to estimate the export and import functions. The analysis is based on the gravity model of international trade. The panel dataset includes 40 countries for a ten year period from 2006 to 2015 which derives 400 observations. The estimation is done based on the pooled OLS, random and fixed effects models. The results of the Breush-Pagan test shows that the estimation results of the random effects model are the most appropriate. The results reveal that the economic size, both of Serbia and its trading partners, distance, similar language and free trade agreements have a major impact on Serbia’s trade. On the other hand, a common border appears insignificant. Furthermore, the export potential is calculated for all trading partners included in this research. The trade with most of the countries seems to be under or near to its potential.

Abstract:

The main objective of this thesis is to examine the major factors of Serbia’s foreign trade in order to estimate the export and import functions. The analysis is based on the gravity model of international trade. The panel dataset includes 40 countries for a ten year period from 2006 to 2015 which derives 400 observations. The estimation is done based on the pooled OLS, random and fixed effects models. The results of the Breush-Pagan test shows that the estimation results of the random effects model are the most appropriate. The results reveal that the economic size, both of Serbia and its trading partners, distance, similar language and free trade agreements have a major impact on Serbia’s trade. On the other hand, a common border appears insignificant. Furthermore, the export potential is calculated for all trading partners included in this research. The trade with most of the countries seems to be under or near to its potential.

Klíčová slova

random effects, Serbia, international trade, gravity model

Keywords

gravity model, random effects, international trade, Serbia

Jazyk práce: angličtina

Datum vytvoření / odevzdání či podání práce: 30. 6. 2017

Obhajoba závěrečné práce

• Obhajoba proběhla 16. 1. 2019
• Vedoucí: Ondřej Šíma
• Oponent: Jiří Pour

Vysoká škola ekonomická v Praze

Magisterský studijní program:
Finance and Accounting