I want to do research on "Trade Policy Changes & Its Economic Impacts", but am failing to detect which econonometric model to use. Any suggestion guys on how to undertake such research.I want to analyse the factors behind trade changes and how they can affect economies especially in developing nations.
I suggest the Trade flows in a spatial oligopoly: gravity fits well, but what does it explain? paper writed by Alberto Salvo da Kellogg School of Management, Northwestern University and published in Canadian Journal of Economics/Revue canadienne d'économique to you undestand the economic meaning of the gravity model.
What is the theory behind the econometric model? Did you formulate a trade model or adopt one from somewhere and wish to estimate key parameters? Or are you data mining? By that I mean running statistical models that explain relationships in the sample as opposed to testing specific trade theories. For example, I formulated a trade theory model that examines the efficacy of important quotas. If you are interested, you can download the paper from http://ssrn.com/abstract=1679513
You could use time series model!!....some sort of Vector Autoregression like (TVP VAR, TVP FAVAR , or atleast FAVAR)!!
in addition toabove suggestions. i do suggest a relationship between trade openness ( X+M/GDP) and gdp and its growth rate with a recent times series methodology = ie var and vecm methodology . you can develop a number of models in any developing country with a structural break.
Better you have to check whether there is studies on the same area and which model they adopted and the factors they identified for their study. Finally conclude which model fits well to the collected data,
Well dear friend for TRADE POLICY CHANGES you need to read about the model of Mundell Fleming, it is about an open economy, you can read about many impacts such as exchange rate, national and international interest rate, gdp impacts. Marshall-Lerner condition, if you want you can add effects of fiscal and monetary policy. And don´t forget to explain about index prices, they are very important because the inflation is a hard problem.
Finally, you can add the model LUCAS´ ISLANDS. I hope to help you.
One thing more the variables are in the theory. you need read books. I recommend you MACROECONOMICS - BLANCHARD, OLIVIER.
Can you briefly explain your research questions...this would help the research community to exactly know what you want to do and the support would be more target oriented!!
I think that the development of all economic activity is closely related to the supply of resources from the financial system. Therefore, I suggest you explore the dynamics of exports as dependent and independent variables are the rate of growth of loans from the banking system and the growth rate of turnover of capital markets.
I wish you a success!!
If you have time series data (hopefully monthly or quarterly) plot the data, and do an eyeball check for structural breaks that may coincide with known policy changes. Then you could use a Chow Test if its a pooled cross section analysis to see if in fact there are statistically significant differences. There are lots of structural break macroeconometric models out there. I can't think of any off hand. But Lutz Kilian at Univ. of Mich. has done some with respect to oil.
Thank you guys for your advice. Am now in a position to do the research. My main focus is on the Volatility of trade policy changes, reasons behind and the reaped impacts from such.
The research is now on advanced stage, Thanks for the advice guys. Will publish it to you in the final format.
Trade liberalization benefits better performing firms and contributes to economic growth. There is evidence that better performing firms tend to enter international markets. Internationally active firms are larger, more productive, and pay higher wages than other firms in the same industry.
- Badges
- Science topic
- Similar topics
- Methodology
- Research Methodology
- Research Papers