Abstract
This paper explores the effects of determinants of bilateral trade on export flows of Republic of Moldova during last decade in the framework of gravity model. Being a structural model with solid theoretical foundations it proves that markets are linked and changes in one partner country can cause changes in trade performance of another partner country. The variables include trade partner’s GDP, economic distance, and Association Agreement membership. Specifically, the model relies on a fixed effect panel estimation for explaining the export flows of the Republic of Moldova. In order to check the viability of the gravity equation, there are executed statistical tests. Based on the analysis, there are provided policy recommendations for trade policy.
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