Gravity Model of Trade || Part 2 || EViews Tutorials

[@Giannis_Giannis-t4h]

Thank you professor!I want to apply a similar gravity model for my country(Greece) including diplomatic representations as well, as independent variables!You are an angel, since you are so helpful!!!!

[@komalkanwarshekhawat_]

Thank you for your kind words. Yes, you can incorporate Diplomatic representation as an independent variable 👍

[@李欣娅]

Thank you Professor, you saved my life!

[@komalkanwarshekhawat_]

Glad to know that you found the video helpful ❤️

[@wahidulsheikhshemon31]

Dear Komal Madam, I would like to extend my heartiest thanks to you for making such a comprehensive video on the Gravity model. According to my knowledge, this is the best video on KZbin on the Gravity model. Thank you once again. I have a request for you- would you please make a similar video on the Input-Output model for measuring the contribution of an industry to the economy/GDP of a country?

[@komalkanwarshekhawat_]

Thank you so much Sir for your kind appreciation. Really grateful! Sir, I shall try my best to upload a video on Input- output model as well. Thanks for your kind suggestion.

[@DafneHuayta]

Thank you so much for your videos, they are very useful for me. My question is if I can use this model to estimate the effect of the trade agreement on the exports of a single trading partner, without using the data panel for several countries.

[@tridishabayan9243]

Thanks a lot ma'am

[@komalkanwarshekhawat_]

Thank you 😊 Glad that you found the content helpful!

[@alext659]

Dear professor, Thank you for your effort for teaching us the gravity model. I have been following your videos about the gravity model and its estimation methods and I'm finding it difficult to build the panel data without getting errors in Eviews. My research is focused on only two countries over a 16 years time period. Could you please give me an advice of how to arrange the data for only two countries in Excel? Many thanks!

[@komalkanwarshekhawat_]

Many thanks for your kind words. Kindly follow this video to arrange the panel data in Excel. kzbin.info/www/bejne/boCvZndvep6aoqs If you still face any problem, kindly let me know. Thanks. Good day!

[@alext659]

@@komalkanwarshekhawat_ Dear professor, Thank you for your reply. I have followed the instructions in the video you mentioned and I have built the panel data of two countries in order to estimate the factors that influence their bilateral trade through the gravity model of trade. However, when I try to check if there is any heteroskedasticity, I keep getting the 'near singular matrix' error and I am not sure what steps I didn't follow correctly. Would it be possible to share the dataset used in this video for learning purposes? Many thanks!

[@komalkanwarshekhawat_]

Near singular matrix error appears in case of presence of Multicollinearity. Sure, I can share the data set. Join my telegram group for the same and drop a text over there.

[@alext659]

@@komalkanwarshekhawat_ Thanks a lot!

[@Darkblue28039]

Thank you so much for the video. I have a question, ¿how many countries at minimum do I need to run this model and obtain correct results?.

[@zainabkhan2475]

Thank you so much maam

[@komalkanwarshekhawat_]

Thanks for watching 🤗

[@knowledgeforsuccess35]

Nice 😊

[@komalkanwarshekhawat_]

Thanks dear ❤️

[@FARIHATHASAN1095]

Good Morning. Need your suggestion. From where I can get the data on RER?

[@komalkanwarshekhawat_]

Check IMF, WDI.

[@nirajpaija7310]

While running fixed effects, how is it possible if the distance variable is time-invariant?

[@Chakradhar_jadhav]

True. Because of time invariant variable in fixed effect estimation many variables would be, omitted from the estimation procedure

[@komalkanwarshekhawat_]

True.

[@FardilahArdiani]

Dear Madam, your explanation is very good. However I have some questions about the Gravity model. 1. Does all data that will be used in the Gravity model have to be made into natural logarithms (LN)? 2. Can the distance obtained from CEPII be used directly? 3. Can you explain to me about calculating economic distance? Thank You

[@Varneshghildiyalvibhu]

Mam if all the variables are not less than 5 percent of significance but some are and some not than, should we procced with the same model or we have to eliminate the variables not getting under the 5 percent of significance?

[@komalkanwarshekhawat_]

The motive is not to obtain all variables with 1/5/10 percent level of significance Instead, find out what all variables are significant/ non-significant.

[@Chakradhar_jadhav]

Dear ma'am, thank you for the explanation. These are my observations and not to criticize you. In your explanation of gravity model, it don't account for inward and outward multilateral resistance (MRT) all trade barriers facing exports from country i to across all destination markets. Which was empirically shown by AvW (2003, 2004) in theory consistent gravity model papers. leaving these terms out of an empirical gravity model has two nasty results. First, the econometric estimates are biased, due to omitted variables. Second, counter-factual simulations produce biased results because they do not take into account the general equilibrium ef- fects captured by the two multilateral resistance terms. Moreover, the general gravity model do not account for domestic trade. Hence structural gravity model with Ppml estimator is much advance then the general gravity mode.

[@komalkanwarshekhawat_]

Thank you for your observations. The motive behind this video was to help researchers and scholars regarding usage and applications of the Gravity model. Further, the idea was to help in Gravity model analysis and methodology. There could be numerous factors that may affect bilateral trade; per se it is must to have a comprehensive literature review for the same as per the requirements of Research objectives. Good day! 😊

[@jijnashikashyap2618]

Ma'am, my query is not related to this video but I am stuck on how to do panel analysis for Fixed effect and random effect model if some of the variables are stationary at 1st difference or 2nd difference? Ma'am pls guide me. 🙏

[@komalkanwarshekhawat_]

All the variables should be I(0) or I(1) or a mix of both. First confirm this, then you can run FEM/REM . 👍

[@IdontKnow-et7qb]

how to interpret the results please make another video

[@MosesChiku]

Dear Madam, i have been following your videos on the gravity model. knowing that parameter distance is included in the gravity model, i would like you to highlight which distance we use from the CEPPI data. for example, in data geo_ceppii we have dis_int while in the data dis_ceppi we have the following dist, distcap, distw, distwces. so, i would you highlight which distance do we consider. your argent response will highly be appreciated Madam thank you.

[@komalkanwarshekhawat_]

Every distance indicator holds a different meaning. For example, distcap means the distance between 2 countries is measured from their capitals. I would suggest, use distcap in that case.

[@MosesChiku]

@@komalkanwarshekhawat_ Thank you so much, Madam.

[@MosesChiku]

Dear Madam, According to your first video, you indicated the trade that existed between India with other countries. according to the definition of the gravity model; it considers Bilateral trade(meaning the trade between two countries). however, I realized in your second video you ran the analysis for all countries selected and interpreted the result. I ran the model comparing only one country and obtained the result indicating the following: common border, common language, common continent, and common colony 0 (empty) in Stata and tried it in Excel format giving me #NUM indicating that the variables face collinearity problem. would you please Madam highlight how to solve the problem. else the Gravity model has to be run for all countries together? thank you.

[@alhassanabubakari6341]

How do I interpret the results of Random Effects Model.

[@komalkanwarshekhawat_]

I have explained in the video how to interpret REM results. Please. Thank you.

[@shambhavipanday5995]

❤

[@komalkanwarshekhawat_]

🤗🤗

[@achrajkanwar3998]

Very nice

[@komalkanwarshekhawat_]

@@achrajkanwar3998 Thank you 🤗

[@emadmuzahim-df4zg]

لماذا هذا لم يكون مترجم بالغة العربية مثل الجزء الاول ..نامل ذلك

[@komalkanwarshekhawat_]

Kindly translate your query in English and then post. Thanks.

[@adilkvian9479]

Ma'am could you please share the excel file ?

[@komalkanwarshekhawat_]

Sure, pls join my telegram channel. Drop a msg in the telegram group. Will share the excel sheet. Good day!