1.3 Using the gravity model calculate the value of trade between country I and J. You can assume: a=b=0.9, c=0.8 and A=0.5The GDP for country I is triple the GDP of country J. Country J GDP is equal to the product of the trading value of all developed countries listed in the given table. The distance between these countries is 28 km. Application of gravity model equation. Given the below equation and table:Ax Yax YDCijCountry Z: Top 10 trading partnersPositionCountryTij123456=78910ABCDETrading Value (in rands)100908070FGHIJCountries A, B, C, D, F, G, H, J, Z are developing countries while the rest are developedcountries.60504030105

1.3 Using the gravity model calculate the value of trade between country I and J. You can assume: a=b=0.9, c=0.8 and A=0.5 The GDP for country I is triple the GDP of country J. Country J GDP is equal to the product of the trading value of all developed countries listed in the given table. The distance between these countries is 28 km.

1.3 Using the gravity model calculate the value of trade between country I and J. You can assume: a=b=0.9, c=0.8 and A=0.5 The GDP for country I is triple the GDP of country J. Country J GDP is equal to the product of the trading value of all developed countries listed in the given table. The distance between these countries is 28 km.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter1: Welcome To Economics!

Section: Chapter Questions

Problem 6SCQ: Suppose we extend the circular flow model to add imports and exports. Copy the circular flow diagram...

See similar textbooks

Similar questions

Refer to Table 4.4 “Measuring TFP So the Model Fits Exactly”. The “implied TFP (A_bar)” in the last column is 0.710 for Spain. What does this value mean? A. Spain’s per capital GDP is 71% of that of the U.S. B. Spanish workers tend to have longer holidays and shorter working days than U.S. workers C. At any given level of per capita capital, Spanish workers produce 71% of the output of U.S. workers D. This number refer to the margin of error in producing the statistics in the table
Mexico and Brazil have very different trading patterns. While Mexico trades mainly with the United States, Brazil trades about equally with the United States and with the European Union. In addition, Mexico does much more trade relative to its GDP. Explain the differences using the gravity model.
The gravity model is frequently used to explain why two countries do not trade. Give examples and causes for this abnormality.
Consider Romer Model 2. Suppose there are two countries, rich and poorone. Both countries have the same population size, L and the same knowledgegeneration productivity parameter, z. At the beginning, time 0, the rich countryhas more knowledge stock than the poor one, Ar0 > Ap0, where subscript labelstime and superscript labels country being rich or poor. However, the fractionof researchers in poor country is larger than the one in rich country, ̄lp > ̄lr .Question 4 Part aIn which country, would you prefer to live in the short-run? How about in thelong-run?How long would it take for the poor country to reach rich one’s per capitaoutput level? Show your results analytically and graphically as well. (If you pre-fer solving this question numerically by assigning values to the above parametersand variables, feel free to do so
An economist makes an assumption that each additional year of education causes future wages to rise by 11 percent. In this model, if a person with 12 years of education makes $24,000 per year, than a person with a 4-year college degree would earn $.... per year. (Round your intermediate calculations to two decimal points)
The Gravity model predicts that two countries trade more the bigger they are and the closer they are to the equator. True False
Ireland and Belgium have very similar trading patterns. Both trades considerably more with the United States than with the European Union (EU), even though they are EU members and are closer to the EU common market than the American market. Explain this anomaly using the gravity model.
G. Menges developed the following econometric model for the West German economy*: Yt = β0 + β1Yt−1 + β2 It + u1tIt = β3 + β4Yt + β5 Qt + u2tCt = β6 + β7Yt + β8Ct−1 + β9 Pt + u3tQt = β10 + β11 Qt−1 + β12 Rt + u4t where Y = national incomeI = net capital formationC = personal consumptionQ = profitsP = cost of living indexR = industrial productivityt = timeu = stochastic disturbances Required: a. Which of the variables would you regard as endogenous and which asexogenous?b. Is there any equation in the system that can be estimated by thesingle-equation least-squares method?c. What is the reason behind including the variable P in the consumption function?
The Heckscher-Ohlin model predicts that trade in goods leads to convergence in prices of factors between different countries. True False
The South African Rand flactuates widly on a daily, weekly, monthly basis. Identify all the variables that would be used in an econometric equation that estimates the relationship between South african economic growth and exchange rates (dollar to rand). appraise each variable that is included in the model using economics theory and briefly discuss the tests used to ensure model is statistically sound.
i need help with this question 1 from my macroeconmics assigments. i have already gotten it wrong twice.
East Asian economies have expanded their proportion of global GDP over the last few decades. Likewise, intra-East Asian trade — that is, trade between East Asian countries – has increased as a share of global trade. Furthermore, East Asian countries are growing their commerce with one another. By using gravity model, explain why.