A Simultaneous‐Equations Model of Trade, Conflict, and Cooperation

Rafael Reuveny and Heejoon Kang

Review of International Economics, 2003, vol. 11, issue 2, 279-295

Abstract: A simultaneous‐equations model is developed for the reciprocal relationship among bilateral trade value, conflict, and cooperation by modeling the actions of exporters, importers, and governments. The model is estimated separately for each of the dyads among the US, the USSR, China, Japan, and (West) Germany for the yearly data from 1948 to 1992. The direction of the effects of conflict or cooperation on trade and that of trade on conflict or cooperation are generally mixed, as expected. Certain reciprocal relationship patterns emerge depending on whether countries belong to the East or West block.

Date: 2003
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