Trade Potential Revisited: A Panel Data Analysis For Zimbabwe

Enrique Martinez-Galan (), Isabel Proença () and Maria Paula Fontoura

No 2015/14, Working Papers Department of Economics from ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa

Abstract: This paper notes that previous results on trade potential based on a panel data set may be biased and proposes the adequate Poisson Pseudo Maximum Likelihood method to estimate trade potential based on the elasticity estimates generated by a gravity model, with conclusions on trade potential based on confidence intervals estimated with the Delta method. This approach had not been yet considered in the literature for panel data. This methodology is used to evaluate Zimbabwe export potential in a period characterized by strong restrictions on trade, based on the elasticity estimates generated by an augmented gravity model for six Southern African Development Community member countries and their exports to the rest of the world. Results show that Zimbabwe has a large unexploited trade potential which will not be realized without political stability and structural reforms. For comparison purposes, we also present the gravity coefficients calculated with other estimation methods.

Keywords: fiscal sustainability; causality; impulse response functions; time-varying coefficients; fiscal rules; logistic model (search for similar items in EconPapers)
JEL-codes: F14 F15 F16 (search for similar items in EconPapers)
Date: 2015-11
New Economics Papers: this item is included in nep-int
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Related works:
Journal Article: TRADE POTENTIAL REVISITED: A PANEL DATA ANALYSIS FOR ZIMBABWE (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ise:isegwp:wp142015

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