Palestinian import - export trade modeling For the period 1968-1998, an application of seemingly unrelated regression equations
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Published
Sep 1, 2008
Abstract
Over the past three decades the Palestinian areas in the West Bank and Gaza Strip experienced the impacts of compulsory integration into the Israeli economy in the aftermath of the occupation of the area by Israel in 1967. Within this integration, area's trade affected markedly by a forced customs union, which mainly implies sharing the same common external tariff with Israel on imports from the rest of the world and free movement for Israeli goods into Palestinian Territories. The objective of this study is to investigate main implications of this imposed customs on Palestinian trade. It uses Seemingly Unrelated Regression Equations estimation procedures (SURE) for import-export trade modeling vis-a-vis an Ordinary Least Square (OLS) one to forecast the behavior of trade. For this purpose the study uses three equations for both import demand and export supply respectively related to the main Palestine trade partners, Israel, Jordan and countries other than Jordan and Israel(the rest of the world). Clearly, empirical results depicts gains of employing with SURE estimation in a comparison with OLS estimation one in terms of both estimated coefficients (trade elasticities) and equations explanatory power (trade variations). Main feature of this imbalanced customs union between PTs and Israel is that while the Palestinian demand has a positive significant impact on imports from and export to Israel, both the Israeli and the rest of the world demand growth have an insignificant impact on the Palestinian exports. Also, under the prevailing relationship with Israel the Palestinian trade experienced losing of competitiveness, a situation let a shock in real exchange rate renders an increase in imports and a decrease in exports in trading with the ROW. Overall, this study reveals the necessity for the elimination of restrictions on Palestinian trade to both the rest of the world and to its regional context, a situation will lead to positive effects on the Palestinian economic-trade performance.
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Keywords
Import - Export Trade Modeling
References
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• Anderson, J.E., (1979), "A theoretical Foundation for the Gravity Equation", The American Economic Review, Vol. 69, No.1, pp 106-115.
• Amon, A. and W einblatt, J., ( 1995), "The Potential for Trade between Israel, the Palestinian and Jordan", Bank of Israel Review, Vol. 69, pp. 113-133.
• El-Jafari, M., (1995), "Macroeconomic Simulation of the Palestinian Economy during The Transitional Period 1995-2000", Law and Economic Review, (World Competition), Vol. b, pp.81-94.
• El-Jafari, M., (1997), "Potential Merchandise Trade of the West Bank and Gaza Strip", Journal of Economic Cooperation Among Islamic Countries, Vol. 18, No.4, pp. 23-55.
• Geraci, V.J. and Prewo, W., ( 1982), "An empirical Demand and Supply Model of Multilateral Trade", The Review of Economics and Statistics, Vol.64, No.3, pp 432-441.
• Greene, W.H. (1993), Econometric Analysis, Macmillan, (2nd edition), New York.
• Griffiths, W., Thomson G., and Coelli, T., (1999), "Prediction output from seemingly Unrelated Area and yield equations", Working Paper Series in Agricultural and resource Economies, No. 99- http:iiwww.une.edu.au/febl/Econ.Studlwps.htm
• Grunfeld, Y. (1958), The Determinants of Corporate Investment, Unpublished Manuscript, University of Chicago, Chicago.
• Grunfeld, Y. and Z. Griliches, ( 1960 )," Is regression Necessarily Bad?", review of Economics and statistics, Vol42, pp 1-13.
• Honma, M. (1991), "Seemingly Unrelated Regression Estimates of Trade-Flow Equations for Japan' in Growth in Japan's Horticultural Trade with Developing Countries: An Economic Analysis.
• IMF, International Financial Statistics Yearbook, Various Issues.
• Israeli Central Bureau of Statistics (I CBS), Statistical Abstract of Israel, Various Issues.
• Judge, G.G, Hill, R.C., Griffiths, W.E., Lutkepohl, H. and Lee, T-C. (1988), Introduction to the Theory and Practice of Econometrics, 2nd edition, John Wiley and Sons, New York.
• Khan, MS. and Knight M.D, (1988), "Import Compression and Export Performance in Developing Countries", The Review of Economics and Statistics, Vol. 70. No. 2, pp. 315-321.
• Lee, J-W and Swage! P, (1997), "Trade Barriers and Trade Flows across Countries and Industries", The Review of Economics and Statistics, Vol.79, No.3, pp372-381.
• Marsh, I.W. and S.P. Tokarick,(1996), "An Assessment of three Measures of Competitiveness", Weltwirtschaftliches Archive, Vol. 132, No. 4, pp. 700-722.
• Paulino, S. and Amelia, u ., (2000), "Trade Liberalisation and Export Performance in Selected Developing Countries", econ-Papcrs@ukc.ac.uk.
• Palestinian Central Bureau of Statistics (PCBS), Current Status Report Series, Various Issues, Rammallah-West Bank.
• Palestinian Monetary Authority (PMA), (2000), Statistical Bulletin, 18th Issue, Gaza, January.
• Pesaran, M.H. and Pesaran, B., (1997), Working with Microfit 4.0: Interactive_Econometric Analysis, Oxford: Oxford University Press.
• Sanso, M., Cuairan, R., and Sanz, F., (1993), "Bilateral Trade Flows, The Gravity Equation, and Functional Form", The Review of Economics and Statistics, Vol. 75, No.2, pp. 266- 275.
• Winters, L.A., (1993), European Integration: Trade and Industry.
• World Bank, (1993), Developing the Occupied Territories. An Investment in Peace, Vol.2 Washington, DC.
• Zellner, A. (1962), "An Efficient Method of Estimating seemingly Unrelated Regressions and Tests of Aggregation Bias", Journal of the American Statistical Association, Vol.57, 348-368.
How to Cite
Abugamea, Gaber Hussain. 2008. “Palestinian Import - Export Trade Modeling For the Period 1968-1998, an Application of Seemingly Unrelated Regression Equations”. Studies in Business and Economics 14 (2). https://doi.org/10.29117/sbe.2008.0049.
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Articles