Title
Gravity of the Customs Union: The Customs Union of Belarus, Russia and Kazakhstan: Gravity Model Approach to Estimation of Trade,Used
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This study measures the anticipatory trade creation and trade diversion effects of Customs Union of Belarus, Russia and Kazakhstan (CUBRK) for chosen industries. Those effects are estimated using Gravity Model of Trade (GMT). Loglinerized and exponential specifications of GMT are estimated with the help of OLS and PoissonPseudoMaximumLikelihood (PPML) estimators. Models include time fixed effects and variables which deal with endogeneity issues. The research data contain large amount of zeros, so OLS is estimated mainly for comparison reasons, since it was proven to be biased in case of zero trade flows. The inference is made based on PPML estimation. In order to capture gradual changes in trade flows, dynamic models are estimated along with static models.
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