A gravity model applied to exports in Nicaragua

Abstract

This paper aims to apply a gravity model for exports and determine the impact of trade agreements signed by some Nicaragua since 1994 to 2013 period to assess empirically the panel data methodology was used to estimate the fixed effects. The findings state that the variables that capture the effect of trade agreements have great significance in increasing exports, being the ALBA agreement that resulted from greater magnitude. Now, although the empirical evidence shows that exports in Nicaragua are very sensitive to transportation costs; means that an increase of 1 percent in these reduced 15.6 percent in the value of exports of the country. The increase in real GDP of both countries of origin and destination generates a marginal impact of 0.58 percent to account for Nicaraguan exports

REICE Vol.3(6) 2015: 1-13