Persistent Patterns of International Commerce

Michael D. Ward and Peter D. Hoff
Additional contact information
Michael D. Ward: Department of Political Science, University of Washington,mdw@u.washington.edu.
Peter D. Hoff: Departments of Statistics and Biostatistics, University of Washington

Journal of Peace Research, 2007, vol. 44, issue 2, 157-175

Abstract: The authors examine a standard gravity model of international commerce augmented to include political as well as institutional influences on bilateral trade. Using annual data from 1980-2001, they estimate regression coefficients and residual dependencies using a hierarchy of models in each year. Rather than gauge the generalizability of these patterns via traditional measures of statistical significance such as p-values, this article develops and employs a strategy to evaluate the out-of-sample predictive strength of various models. The analysis of recent international commerce shows that in addition to a typical gravity-model specification, political and institutional variables are important. The article also demonstrates that the often-reported link between international conflict and bilateral trade is elusive, and that inclusion of conflict in a trade model can sometimes lead to reduced out-of-sample predictive performance. Further, this article illustrates that there are substantial, persistent residual exporter- and importer-specific effects, and that ignoring such patterns in relational trade data results in an incomplete picture of international commerce, even in the context of a well-established framework such as the gravity model.

Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:sae:joupea:v:44:y:2007:i:2:p:157-175

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