Determinant Factors of German Bilateral Export Volume: Evidence From Panel Data Analysis

Abstract

"This study applies the gravity model of international trade to analyze determinant factors of bilateral export volume by specifically looking at German exports. Germany currently stands as one of the largest exporters in the world. By examining the export flow patterns of Germany, we can get a better understanding of what factors facilitate trade and which ones discourage. Research is based on panel data of 163 countries taken from the years 2009-2018. Analysis was conducted based on the specifications of the gravity model of international trade. Fixed effects and random effects models were estimated. The conclusions from the estimated model are that the gravity model is significant and an accurate model for determining bilateral trade flows in the case of Germany. The model also shows that membership in the European Union has a significant and positive impact on exports. Inflation has an insignificant impact on export volume, while population has a significant and non-linear relationship with exports."