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Global trade is shaped by a complex mix of factors beyond supply and demand, including tangible variables like transport costs and tariffs, as well as less quantifiable influences such as political and economic relations. Traditionally,…
The Gravity Model is the workhorse for empirical studies in International Economies for its empirical power and it is commonly used in explaining the trade flow between countries; it relies on a function that relates the trade with the…
The presence of a high number of zero flow trades continues to provide a challenge in identifying gravity parameters to explain international trade using the gravity model. Linear regression with a logarithmic linear equation encounters an…
Gravity equations are often used to evaluate the effects of trade policies, such as regional trade agreements. We argue that their suitability for this purpose critically depends on their ability to produce unbiased out-of-sample…
The gravity model, inspired by Newton's law of universal gravitation, has long served as a primary tool for interpreting trade flows between countries, using a country's economic `mass' as a key determinant. Despite its wide application,…
In the economic literature, geographic distances are considered fundamental factors to be included in any theoretical model whose aim is the quantification of the trade between countries. Quantitatively, distances enter into the so-called…
We study the bilateral trade problem: one seller, one buyer and a single, indivisible item for sale. It is well known that there is no fully-efficient and incentive compatible mechanism for this problem that maintains a balanced budget. We…
This paper presents a novel methodology for predicting international bilateral trade flows, emphasizing the growing importance of Preferential Trade Agreements (PTAs) in the global trade landscape. Acknowledging the limitations of…
The goal of international trade theories is to explain the exchange of goods and services between different countries, aiming to benefit from it. Albeit the idea is very simple and known since ancient history, smart policy and business…
Understanding international trade is a fundamental problem in economics -- one standard approach is via what is commonly called the "gravity equation", which predicts the total amount of trade $F_ij$ between two countries $i$ and $j$ as $$…
Recent events such as the global financial crisis have renewed the interest in the topic of economic networks. One of the main channels of shock propagation among countries is the International Trade Network (ITN). Two important models for…
This paper explores the gain maximization problem of two nations engaging in non-cooperative bilateral trade. Probabilistic model of an exchange of commodities under different price systems is considered. Volume of commodities exchanged…
Globalization is one of the central concepts of our age. The common perception of the process is that, due to declining communication and transport costs, distance becomes less and less important. However, the distance coefficient in the…
The international trade network (ITN) has received renewed multidisciplinary interest due to recent advances in network theory. However, it is still unclear whether a network approach conveys additional, nontrivial information with respect…
Economic complexity - a group of dimensionality-reduction methods that apply network science to trade data - represented a paradigm shift in development economics towards materializing the once-intangible concept of capabilities as…
To achieve inclusive green growth, countries need to consider a multiplicity of economic, social, and environmental factors. These are often captured by metrics of economic complexity derived from the geography of trade, thus missing key…
Based on the misleading expectation that weighted network properties always offer a more complete description than purely topological ones, current economic models of the International Trade Network (ITN) generally aim at explaining local…
The structure of the International Trade Network (ITN), whose nodes and links represent world countries and their trade relations respectively, affects key economic processes worldwide, including globalization, economic integration,…
We analyze export data aggregated at world global level of 219 classes of products over a period of 39 years. Our main goal is to set up a dynamical model to identify and quantify plausible mechanisms by which the evolutions of the various…
Recent studies highlight economic complexity's role in mitigating fiscal crises, often measured via an economy's trade structure. Trade, however, is just one facet of an economy's structure and omits critical innovative activities like…