Work detail

Gravity model for Czech Republic - Test of the effects of indirect trade

Author: Mgr. Marek Wlazel
Year: 2014 - summer
Leaders: Ing. Vilém Semerák M.A., Ph.D.
Work type: Economic Theory
Language: English
Pages: 92
Awards and prizes: M.A. with distinction from the Dean of the Faculty of Social Sciences for an excellent state-final examination performance.
Abstract: The aim of this thesis is to incorporate the effects of the indirect trade into
the gravity model for Czech Republic. Using data from the recently released
OECD-WTO TiVA database, a panel of 56 countries in 5 years between 1995
and 2009 is constructed. The traditional approach of estimating the log-
linear form of the equation is questioned and in line with current academic
research, the Poisson Pseudo Maximum Likelihood method is applied. The
empirical analysis does not reveal any unambiguous effect of adjusting the
gross exports for their foreign content; it rather confirms that Czech ex-
ports are significantly driven by the demand for German exports and finds
that they are the higher the greater is the share of services value added.
Furthermore, it is found that the destination of Czech exports is not signif-
icantly determined by target country’s participation in global value chains




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