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Financial Analytics: Science and Experience
 

Modeling of mutual commodity trade between countries (a case study of the Eurasian Economic Union member States per industry)

Vol. 8, Iss. 34, SEPTEMBER 2015

PDF  Article PDF Version

Received: 30 July 2015

Accepted: 5 August 2015

Available online: 7 October 2015

Subject Heading: MATHEMATICAL ANALYSIS AND MODELING IN ECONOMICS

JEL Classification: 

Pages: 41-54

Radionova M.V. National Research University Higher School of Economics, Perm, Russian Federation
m.radionova@rambler.ru

Kulakova A.M. Prognoz ZAO, Perm, Russian Federation
kulakova@prognoz.ru

Importance Studying the reasons for international trade and implications of its changes gains momentum in the contemporary economic science, since it is important to understand those aspects of trade relations in order to take appropriate decisions that may influence any economy and the global economy as a whole.
     Objectives The research pursues making up and evaluating an econometric model intended to identify key meaningful relations between factors that influence trade. The research relies upon data on mutual exchange of commodities within the Eurasian Economic Union.
     Methods
To attain the objective, we evaluated a panel fixed-effects regression model on the basis of data on mutual trade of the EEU member countries per industry. Based on the parameters of the model, we could make a conclusion on its high quality in terms of statistical and economic significance.
     Results We examined the existing approaches to mutual trade modeling and hypothesized on factors that influenced the volume of mutual trade and the nature of this effect. We considered volumes of production and aggregate consumption, average weighted prices of the exporter, importer and worldwide. The article presents a format of the EEU mutual trade model. The parameters of the model are evaluated against real data per industry and the panel fixed-effects regression model.
     Conclusions and Relevance The research brings practical value as the proposed model can be tested in operations of any international organization, further developed and result in comprehensive evaluation of implications of integration processes in the Eurasian economic space.

Keywords: mutual trade model, panel data, modeling, trade flow

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