Effects of Geopolitical Risks on Trade Flows: Evidence from the Gravity Model

Ender Demir, Giray Gözgör, Rangan Gupta and Huseyin Kaya

No 201835, Working Papers from University of Pretoria, Department of Economics

Abstract: Using a classical gravity model, this paper examines the effects of geopolitical risks on trade flows, from 18 exporter emerging economies into 164 importer countries, for the period of 1985 to 2013. We use the new index of geopolitical risks (GPR index) and to the best of our knowledge, it is the first paper in the literature that considers the new GPR index in a gravity model. The paper implements the fixed-effects (FE), the random-effects (RE), the Hausman-Taylor (HT), and the Poisson Pseudo-maximum Likelihood (PPML) estimations. The findings indicate that geopolitical risks negatively affect the trade flows. The paper also discusses the potential policy implications.

Keywords: geopolitical risks; trade flows; international trade; gravity model; emerging economies; panel data estimation techniques (search for similar items in EconPapers)
JEL-codes: C33 D74 D81 F14 F17 F51 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2018-06
New Economics Papers: this item is included in nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Journal Article: Effects of geopolitical risks on trade flows: evidence from the gravity model (2019)
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