Gravity Models in Theory of International Trade and their Application for Estimating Effects of Regional Trade Agreements in Europe
|Author:||Bc. Tomáš Dzurilla|
|Year:||2003 - summer|
|Leaders:|| prof. RNDr. Jan Ámos Víšek CSc.
|Work type:|| Bachelors
|Awards and prizes:|
|Abstract:||Abstract in English. The basic question this paper deals with is an analysis of importance of different regional trade agreements on the trade flows in Europe using gravity models in theory of international trade.
The first part explains the mechanism of how do the impediments to trade decrease trade flows and why they are "harmful" to the economic growth and welfare. Later it discusses and justifies the empirical tool for estimating trade flows: a gravity model. It describes basic philosophy of the model, offers a reader some historical development, and finally shows the derivation of the two theoretical gravity equations.
The second part itself is the actual estimation of the trade flows using econometric models based on augmented gravity equation. The models try to answer the basic questions stated in the introduction: whether regional trade agreements in Europe create favourable conditions for enhancing trade among its members. It also deals with the dynamic analysis of the trade flows in Europe.