Abstract

AGUIRRE GONZALEZ, Medardo; CANDIA CAMPANO, Claudio; ANTON LOPEZ, Lilliam  and  BELTRAN VALDEBENITO, Javier. A GRAVITY MODEL OF TRADE FOR NICARAGUAN AGRICULTURAL EXPORTS. Cuad. Econ. [online]. 2018, vol.37, n.74, pp.391-428. ISSN 0121-4772.  https://doi.org/10.15446/cuad.econ.v37n74.55016.

This research aims to find the determining factors of Nicaraguan agricultural exports. To carry out this study, the author formulated a Gravity Model of Trade (GMT) and then made an estimation using a version of Ordinary Least Squares (OLS) that incorporates a consistent covariance matrix estimator to correct the heteroskedasticity and autocorrelation effects. The data considered observations over twenty years and for twelve countries: eight have signed a Free Trade Agreement (FTA) with Nicaragua and four have not. The variables that significantly increased the flow of Nicaraguan agricultural exports are the following: Nicaragua’s trading partners’ population, Nicaragua’s Gross Domestic Product per capita (GDP pc), the Real Exchange Rate (RER), and Nicaragua’s trading partners’ GDP pc; however, the distance variable turned out to be significantly trade-inhibiting. Free Trade Agreements (FTAs) predominantly have significant effects.

JEL: Q17, Q18, F14, C50.

Keywords : Gravity model of trade; Nicaraguan agricultural exports; free trade agreements..

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