Browsing by Subject "Gravity model"
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Item Open Access Is environmental efficiency trade inducing or trade hindering?(Elsevier, 2014) Doganay, S. M.; Sayek, S.; Taskin, F.Global efforts to identify strategies for sustainable economic growth and development underline the need for understanding important links between environmental policies and international trade. In this paper, by constructing an environmental efficiency index for 111 countries from 1980 to 2009, we are able to empirically test for one such link. An improvement in the environmental efficiency index in terms of carbon dioxide emissions reflects a decrease in the cost of efforts to mitigate the environmental costs associated with growth. Countries that improve their environmental efficiency are found to experience strong international trade effects, both through increased exports and increased imports. While the positive link between efficiency improvements and exports is supportive of the Porter hypothesis, the positive link between efficiency improvements and imports is supportive of strong positive income effects on account of environmental efforts. These results, which are robust to alternative estimation strategies, lend strong support to global efforts to improve countries' environmental efficiencies. © 2014 Elsevier B.V.Item Open Access Regional transport infrastructure and trade flows in the EU(2021-08) Özcan, BerrinHow does regional transport infrastructure affect bilateral trade flows? An extensive literature on infrastructure and trade flows has attempted to answer this question by using country level or regional data. This current thesis focuses on the European Union (EU) and investigates the effect of transport infrastructure on international and intranational trade flows using NUTS 2 (Nomenclature of Territorial Units for Statistics) level data from 200 EU regions between the years 2000-2010. It is the first study to focus on flows and infrastructure at regional level in a multi-country setting. As in the previous studies in the infrastructure literature, the gravity equation is used to explain the relationship between the regional transport infrastructure and trade in the EU. Various alternative estimation methods such as Fixed Effects, PPML, lagged variables, instrumental variables (IV) and Hausman-Taylor IV method are used in order to overcome the issues related to heteroskedasticity, reverse causality and biased estimates that are frequently encountered with gravity equation. In the presence of bilateral and time fixed effects, the results suggest an increase of 0.05 to 0.13 per cent bilateral trade as infrastructure measures increase by 1 per cent. The robustness check follows that the estimates are not sensitive to the choice of unit of measure for the infrastructure variables.Item Open Access A thesis on exchange rates, fundamentals and trade(2014) Doğanay, Seda MeyveciThis dissertation is made up of three essays on understanding the exchange rate movements and the link between the exchange rate and the real economy. In the first essay, exchange rate movements are decomposed into two components that are driven by the observable fundamentals and the unobservable factors in the economy with different statistical methods. Then, these methods results are compared in a reduce form equation in a panel setting that enables us to understand the economic sense behind these decomposition techniques. From this analysis, Christiano and Fitzgerald Filter (C-F Filter) (2003) is selected as the method that decomposes real exchange rate into permanent and temporary components which are respectively components that capture the fundamentals and unobservables. In the second essay the Meese and Rogoff puzzle is analyzed through testing the scapegoat theory of exchange rate. Scapegoat theory of exchange rate claims that when exchange rate changes due to an unobserved factor, to rationalize this movement, agents give more weight to a fundamental that reveals a large variation from its mean which creates an exchange rate movement in the expected direction. This part presents an empirical test of the scapegoat theory of exchange rate using Turkish data. It is found that there exists a strong and robust empirical support for the scapegoat theory of exchange rate. Of all the fundamentals, between 2003-2013 market participants have viewed the current account as the scapegoat; the current account variable and its scapegoat incidences have the statistically significant and theoretically expected effect on nominal spot exchange rate return. Finally in the last essay making use of the decomposed exchange rate series the impact of exchange rate on bilateral trade flows is empirically analyzed using the Gravity Model in a panel setting. The estimation is done for using aggregate bilateral trade data. From this analysis we conclude that the impact of currency depreciation on trade flows depends on whether that change in the exchange rate reflects a shift in trend or is just a transitory movement.