Trade Flows of Bangladesh: A Gravity Model Approach

Mili Roy () and Md. Israt Rayhan ()
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Mili Roy: Institute of Statistical Research and Training (ISRT), University of Dhaka
Md. Israt Rayhan: Institute of Statistical Research and Training (ISRT), University of Dhaka

Economics Bulletin, 2011, vol. 31, issue 1, 950-959

Abstract: This study gives an overview of different methodologies related to gravity model analysis in Bangladesh trade flow. A pooled cross section and time series data were analyzed to incorporate the country specific heterogeneity in country pair trading partners. The trade flows are justified by the basic gravity model since Bangladesh trade is positively significant by the economy size and inversely related to trade barrier. Accordingly, pooled ordinary least square, fixed effect and random effect methods are implied. This study also explores extended gravity model that depicts trade is determined by the gross domestic product, openness of the economy and exchange rate. In addition, cross section results show that regional trade arrangement which is South Asian Association for Regional Co-operation and border are significant for Bangladesh trade.

Keywords: Gravity model; Pooled Ordinary Least Square; Fixed effect; Random effect. (search for similar items in EconPapers)
JEL-codes: C5 F1 (search for similar items in EconPapers)
Date: 2011-03-22
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Citations: View citations in EconPapers (7)

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