Poisson Pseudo Maximum Likelihood Research Articles

Environmental, Geographical, and Economic Impacts of Inbound Tourism in China: A Mixed-Effects Gravity Model Approach

This study examines the dynamics of inbound tourism in China, utilizing a mixed-effects gravity model to analyze data from urban clusters around China’s three major airports. The research methodology of the study includes applying advanced econometric techniques, such as the Poisson pseudo-maximum likelihood estimation, to ensure robust and accurate results. The study focuses on international tourist arrivals and foreign exchange earnings, identifying key drivers such as tourism resources, transportation safety, and service quality. Our findings indicate a 10% increase in per capita GDP correlates with a 0.88% rise in inbound tourist numbers. Additionally, proximity to major urban centers like Beijing, Shanghai, and Guangzhou significantly influences tourist arrivals, with every 100 km increase in distance resulting in a 5.56% decrease in tourist numbers. The study also explores the impact of environmental factors on tourism, suggesting that improvements in green coverage and reductions in industrial waste and traffic fatalities could enhance tourist arrivals. Conversely, environmental protection measures can both positively and negatively impact tourism. This research provides a strategic blueprint for policymakers and professionals in tourism and environmental sustainability, emphasizing the importance of integrated environmental sustainability in tourism development strategies. The model accounts for up to 79% of the variability in inbound tourism flows, offering robust evidence that economic and policy dimensions impact tourism.

The Role of Time Zone Differences on Bilateral Service Flows from Kenya

ABSTRACT This study investigates the effect of time zone differences on service exports (total and nine categories—travel, transport, computer and information, construction, financial, insurance, government, other business services, and personal, cultural, and recreational services) from Kenya. Estimates from the Poisson Pseudo-Maximum Likelihood (PPML) estimator of the gravity model on bilateral service exports data from Kenya to 176 countries, for the period 2005–2019, show that the effects of time zone differences between Kenya and partner countries is positive and statistically significant in technology-sensitive service exports (computer and information) while negative for construction and government service exports. Further analysis shows that these results are robust when an alternative model is employed and overlapping workday hours are used. The authors also find that the effect of time zone differences on services is nonlinear and sensitive to regulations and physical infrastructure (particularly mobile subscriptions). Attracting investment in technology-sensitive sectors should be encouraged through appropriate policy, given the positive impact of time zone differences on their exports. Traders in these sectors can also create networks with foreign firms. Deregulating and developing information and communication infrastructure, to expand mobile subscriptions, should also be encouraged.

Trade, gender equality and institutional quality: Evidence from the gravitational approach

Purpose The contributions of gender equality to trade and the moderating impact of institutional quality on the trade-gender link have been understudied in contemporary literature. Therefore, this paper aims to use the augmented gravity model to investigate the impacts of gender equality and institutional quality on trade, and the moderating impact of institutional quality on the trade-gender link. Design/methodology/approach The panel data is comprised of bilateral trade flows of Vietnam and 40 major trading partners in the 2002–2021 period. Estimation methods include combined fixed effect, random effect, system generalized method of moments two-step (SGMM-II) and Poisson-pseudo maximum likelihood (PPML) which allow the treatment of heterogeneity, endogeneity and heteroskedasticity in the research models. Findings The exporting country’s gender equality has an inconclusive impact on trade in SGMM-II and PPML estimations. However, female labor force participation in the exporting country increases trade. Importing country’s gender equality and female labor force participation increase trade. The direct impact of institutional quality on trade is inconclusive, which is dependent on estimation methods. Most noticeably, the institutional quality of exporting and importing countries facilitates the hampering effects of gender equality and female labor force participation on trade. Research limitations/implications Future research should apply the framework of this paper to sectoral trade, which allows more sector-specific policy implications to be delivered. Moreover, gender development, gender inequality and institutional quality should be included in the SGMM estimations as endogenous variables for robustness checking purposes in future research. Practical implications The paper has justified the integration of gender-specific issues in trade policies, which aligns trade with sustainable development agenda. The explored moderating impact of institutional quality of the exporting country has implied the trade-off relationship between gender equality and export growth in the effort to improve institutional quality. Reversely, in the case of importing countries with higher institutional quality, improved gender equality may mitigate the trade deficit by hampering import growth. Originality/value Investigating the impact of gender equality on trade is the prominent contribution of this paper. Gender equality is considered by three component indicators which include gender development, gender inequality and female labor force participation. New measurement approach to the institutional quality level is also introduced. Furthermore, the explored moderating impacts of institutional quality on the trade-gender link are novel in the literature on sustainable development.

Indonesia’s Potential Trade Flow to EAEU Countries: The Gravity Model Approach

This research aims to examine the Indonesia’s potential trade flow to EAEU countries using Augmented Gravity Model with Pseudo Poisson Maximum Likelihood (PPML) estimator, revealed comparative advantage (RCA) index, and constant market share analysis (CMSA) index on trade flows data for the period 2002-2022. The results indicates that trade relation between Indonesia and EAEU countries align with Heckscher-Ohlin Theory of trade, which states that dissimilar countries tend to trade more. Furthermore, the finding emphasizes the importance of Indonesia-EAEU preferential trade agreement to reduce or eliminate tariffs which otherwise will increase trade between both parties.

Trade, Gravity, and Aggregation

Abstract Gravity equations are an important tool in empirical international trade research. We study to what extent sector-level parameters can be recovered from aggregate gravity equations estimated via Poisson pseudo maximum likelihood. We show that in the leading case where trade cost regressors do not vary at the sector level, estimates obtained with aggregate data have a clear interpretation as a weighted average of sectoral elasticities. Otherwise the estimates are biased, but researchers may possibly infer the direction of the bias. We illustrate our results by revisiting Baier and Bergstrand’s (2007) influential study of the effects of free trade agreements.

Do institutions matter for agri-food imports and exports between China and Africa? A gravity model analysis

This paper aims to study the role of institutional quality on agri-food trade (import and export) between China and 48 African countries during the 2001-2021 period. The gravity model of trade was employed by estimating the Generalised Least Square (GLS) and the Poisson Pseudo-Maximum Likelihood (PPML) estimators, which include zero trade flows for panel data. The main results show that voice and accountability, control of corruption, and the rule of law all enhance agri-food trade flows. While political instability encourages agri-food exports to China. In addition, the economic size of China, the trade cost (distance), and the population of African countries also encourage agri-food trade between China and African economies. Moreover, access to the sea, exchange rate policy, and the economic size of African nations deplete China’s agri-food imports from Africa. We showed the mechanism through which each institutional variable affects China’s agri-food trade flows to African nations.

Tác động của biến động tỷ giá hối đoái đến xuất khẩu nông nghiệp của Việt Nam và vai trò của tự do hóa tài chính tại nước đối tác

This study assesses the impact of real exchange rate volatility on Vietnam’s agricultural exports, considering the role financial liberalization in its trading partners. The author employs Poisson pseudomaximum likelihood estimators to estimate a gravity model covering bilateral agricultural exports from Vietnam to 187 its trading partners during 1996-2021. The empirical results of this study indicate that exchange rate volatility hampers agricultural exports of Vietnam and financial liberalization in its trading partners is crucial for alleviating this adverse nexus. Therefore, maintaining stable exchange rate is necessary to boost agricultural exports of Vietnam. In addition, under great turmoil in global economy with strong fluctuations in exchange rates, Vietnam still has a chance to increase its agricultural exports to countries that have high levels of financial liberalization. This finding has an important implication for selecting trading partners to improve export performance of agricultural sector in Vietnam.

Investigating the Validity of Climate Migration: Empirical Evidence from the Most Polluted Countries

The literature generally finds that lower air quality has been an important determinant of migration. This study builds a migration model employing annual data from 2010 to 2019 for the most polluted ten countries to test the validity of migration caused by air pollution through PM2.5 concentration. The Poisson Pseudo Maximum Likelihood method results show that air pollution is one of the most significant determinants of migration from the most polluted countries. Moreover, the low income level also pushes people to migrate more from their origin regions than richer ones. The study provides some policy recommendations for policy-makers in the countries where people breathe the most polluted air: (i) governments should follow growth-promoting economic policies; (ii) environment-friendly production techniques should be implemented to prevent worsening environmental quality; (iii) climate-induced mass migration should be considered while making security policy arrangements.

Impact of Anti-Dumping on Chinese Exports to Countries in ASEAN Plus 6

ABSTRACT Concerns about China’s excessive production capacity prompt a closer examination of Anti-dumping Duties (ADs) as a tool for managing trade imbalances. Within the ASEAN region, ASEAN plus 6 countries, especially India, are emerging as alternatives to China in global value chains. These countries import a broad range of products from China, including intermediate goods, making it vital to analyze the effects of ADs on these imports. Using the Poisson Pseudo-Maximum Likelihood (PPML) method, which effectively handles zero trade flows, heteroskedasticity, and endogeneity, this study explores the use of ADs beyond traditional major economies like the US and EU, focusing on their adoption by less economically developed countries. The findings show that ADs significantly curtail Chinese exports, potentially hindering stronger cooperation within ASEAN plus 6 and slowing regional trade dynamics. This research serves as a critical benchmark for assessing China’s strategic role in global economic leadership, viewed with reservations by several countries, including the US. It emphasizes the need to further explore China’s interaction with ASEAN plus 6 partner countries, particularly concerning trade remedy such as ADs and their impact on regional integration.

A gravity model analysis of trade regulations on wood products exports: Evidence from Cameroon, Ghana, and the republic of Congo

The study assesses the impact of the Forest Law Enforcement, Governance and Trade Voluntary Partnership Agreement (FLEGT VPA) and the Lacey Act Amendment (LAA) on the export quantities of wood products from Cameroon, Ghana and the Republic of Congo using the panel gravity Poisson Pseudo Maximum Likelihood (PPML) technique. The results indicate that FLEGT VPA had a negative and significant impact on industrial roundwood export quantity from all three countries. Similarly, its effects on the export of sawnwood and wood-based panels are also negative, except for Cameroon. On the other hand, the impact of LAA appears to be mixed. These results are validated by applying an alternative Driscoll-Kraay robust standard error estimation method.

Coupling and decoupling of ancestral linkages and current cross-border economic activities: Genetics and policy

This paper studies the potential link between the biological evolution of populations and present-day economic interactions by estimating the correlation of shared ancestry among populations with cross-border capital and human flows. To this end, we employ the new concept of genetic distance, based on (dis)similarity of neutral gene alleles, to quantify shared ancestry. We then incorporate the genetic distance measure into an augmented gravity model, traditionally used to analyze the effect of geographical distance on bilateral exchange. Our analysis focuses on bilateral foreign direct investment (FDI) and migration across 135 countries and we use both linear regression techniques as well as the Poisson Pseudo-Maximum Likelihood Estimator to account for any non-linearities in the model. Our results show that a 1% increase in genetic distance reduces FDI flows by 0.08% while controlling for other distance constructs and factors associated with global capital and human movement. Genetic distance also has a negative effect on migration, where a 1% increase in genetic distance reduces migration flows by 0.22%, with all other things remaining constant. Our study, therefore, links shared ancestry with economic behavior, showing how historical connections are associated with current economic exchanges among nations. Additionally, recognizing that ancestral ties are outside human control, we examine policy measures that help nations overcome such distance barriers. Our findings show that strengthening a nation’s institutional quality and adherence to the rule of law can effectively mitigate any negative correlation of distance constructs with economic exchanges. These insights suggest that prudent policies to foster a stable business environment are essential for any nation to attract FDI and human capital, even from geographically or genetically distant nations.

Indirect channel of trade agreements in deepening global value chains

AbstractPreferential trade agreements (PTAs) between trading partners are known to have positive impact on the expanding and deepening of global value chain integration due to lower trade and investment barriers. Less is known, however, is if other PTAs of PTA partners have any impact on the value‐added trade linkages of the direct PTA partners concerned. Based on compositive indicators measuring the breadth and depth of PTAs from 2007 to 2018 and using Multiregional Input–Output Table database covering 62 countries and 35 sectors and the Content of Deep Trade Agreements database, this paper estimates the multiplicative form of the constant‐elasticity augmented gravity equation model by a Poisson Pseudo Maximum Likelihood (PPML) estimator. This study shows that indirect impact of the deepening of trade agreements of a country's PTA partner exerts positive, significant impact on value‐added exports of a country. Both backward and forward linkages of a country measured by various decomposition of valued added exports indicate this indirect channel of value chain deepening effect even outweighs the direct impact from the deepening of PTAs between direct trading partners with significant policy implications in formulating PTA strategies.

Trade Diversion effects of China`s Vat Export Rebates

AbstractThe utilization of value-added tax (VAT) export rebates serves as a key component of Chinese trade policy. While existing literature extensively demonstrates the positive impact of these rebates on Chinese exports, the potential negative repercussions for global trade, widely debated in the media, have remained relatively unexplored. This study assesses the trade diversion effects of China's VAT rebates within a "four-way" fixed effects Poisson Pseudo-Maximum Likelihood structural gravity framework spanning 75 countries over the period 2004–2018. The results indicate that, on average, a 1% increase in the rebate leads to a 2.62% reduction in third-country exports. The impact varies significantly at the country level. Wealthier nations with greater trade liberalization and diversified exports at the intensive margin are less susceptible to the effects of China’s export rebate policy. Additionally, there is evidence that countries exporting higher-quality goods experience more significant negative effects. Finally, the negative effects are driven by machinery and equipment sector and intensive margin.

Towards a cleaner and sustainable Europe and Central Asia: An investigation of the logistics‐environment nexus

AbstractThe logistics industry is the backbone of global trade and is crucial for the attainment of economic progress across the world. However, the industry involves activities that increase the consumption of energy resources including fossil fuels, which harms the environment. Thus, with a special focus on Europe and Central Asia, this study explores the logistics‐environment by evaluating the impact of logistics performance (LP) on environmental performance (EP) while controlling for key macroeconomic indicators such as income, trade openness, foreign direct investment, and industrialization. The motivation for this study is derived from the United Nations Sustainable Development Goals (SDGs‐11 and 13) which highlight sustainability and climate change mitigation. Using Poisson pseudo maximum likelihood with high‐dimensional fixed effects (PPMLHDFE) for 47 European and Central Asian countries over the period 2007–2018, the findings revealed that the overall logistic performance, and some of its components—customs, trade, and transport infrastructure, and tracing and tracking have a significant positive impact on the overall EP, environmental health, and ecosystem vitality. Additionally, the study confirms the detrimental effects of economic growth, trade, and industrialization on environmental quality and health from logistics and supply chain management (SCM) perspectives. Further policy caveats and suggestions are elucidated in the concluding section.

The more the better? How degree programs’ variety affects university students’ churn risk

Students’ intra- and, especially, inter-degree relocation poses significant challenges that tertiary education systems and universities must address to identify the best possible solutions for its reduction. Indeed, this phenomenon has a major impact on several aspects, from the reallocation of financial resources to factors related to the organization of spaces and activities, as well as in terms of human and social capital. Moreover, it is much more challenging when involving different universities in different geographical areas. This paper addresses the issue of churn risk among students and its relationship with the institutions’ educational offerings, in terms of degree programs, by accounting for the impact of the characteristics of both universities and hosting areas. In particular, the analysis relies on Italian administrative data regarding students who decide to change university or field of study when enrolling in their second year of career. The results obtained performing the Poisson Pseudo Maximum Likelihood estimation show that the variety and the dimension of universities’ services supply contribute to reducing students’ churn risks and are positively associated with universities’ retention rates.

Pemodelan Pengaruh Sektor Keuangan Terhadap Pertumbuhan Ekonomi Di Indonesia

The financial sector has a major influence on economic growth in Indonesia. Good modeling influences the accuracy of economic growth predictions and has an impact on the financial sector. Several models have been introduced to analyze the relationship between the two, but it is necessary to test which of these models is most appropriate. This research aims to find the best model of the financial sector's influence on economic growth in Indonesia. Three models were compared so that the best model was selected, namely the Bayesian Vector Autocorrelation (BVAR), Linear Regression, and Pseudo Poisson Maximum Likelihood (PPML) models. The comparison method was carried out to determine the best model from the third model using various criteria, and then an in-depth study of the best model was carried out by considering various diagnostic tests and stability tests. The analysis results show that the BVAR (2) model is the best model among the three existing models. However, some specific analysis results in the regression analysis model (such as the negative impact on CPS) and the PPML model (such as the high R-square) can be taken into consideration by policyholders in the financial sector in determining policies related to these areas for economic growth.

Assessing the impact of non-tariff measures on Sri Lankan mango exports: insights, challenges, and recommendations

IntroductionWith the increase in non-tariff measures (NTMs) in recent years, understanding their impact on trade policies and agricultural exports is of utmost importance for countries like Sri Lanka, where the proliferation of NTMs has posed substantial impediments to its mango export industry. However, studying NTMs can be challenging due to their complex nature, diverse range, and limited information availability.MethodsThis research aims to investigate the significant effect of NTMs on Sri Lankan mango exports, identify the pivotal drivers influencing mango exports, and analyze the performance of mango exports in Sri Lanka. This study utilized a panel dataset of 16 importing countries spanning the period from 2000 to 2021. The primary focus was on examining NTM-related challenges and obstacles faced by the mango export industry in Sri Lanka. The identification and quantification of these obstacles were achieved through a multifaceted approach in which assessment of NTM-related rejections, both domestic and overseas, evaluation of NTM incidences using frequency and coverage ratio measures, and the deployment of various gravity model equations to quantify the effect of NTMs were taken into consideration. Probit, Ordinary Least Square, Random Effects, and Poisson Pseudo Maximum Likelihood estimation techniques were utilized for data analysis.ResultsThe findings indicate a significant inverse correlation between the increase in the total count of NTMs and Sri Lankan mango exports if the country aims to export more mangoes to relevant markets, while Sanitary and Phytosanitary Measures (SPS), Technical Barriers to Trade (TBT), and Pre-shipment Inspection (PSI) contributed to increased mango exports. Among other explanatory variables, the GDP of both importing and exporting countries had a positive influence on Sri Lankan mango exports. Surprisingly, the distance to the importing country had no significant effect, though it shows a negative sign.DiscussionThis study provides valuable insights into the impact of NTMs on Sri Lankan mango exports. It highlights the considerable influence of NTMs on the overall fresh fruit export sector. We recommend proactively aligning internal quality testing regulations with the standards required by destination countries to promote future expansion.

Information communication technology and manufacturing industry exports based on technology intensity in OECD and non-OECD countries

Studies on the effect of Information and Communication Technology (ICT) on the export of the manufacturing industry, as disaggregated into the low-, medium-, and high-technology intensity, were lacking. However, the trade impact of ICT is mixed and relies on countries’ development and adoption of technology. To this end, this study explicitly contributes to this strand of literature. By using some key and popular ICT indicators we examined the comparative influence of ICT on the manufacturing industry exports defined by their technology intensity/adoption in OECD and non-OECD countries. A panel data technique with the PPML (Pseudo-Poisson Maximum Likelihood) covering the period 2010–2018 was applied for the analysis. Our empirical strategy indicates that internet use only promotes manufacturing exports of high-technology intensity in OECD countries. Low-technology intensity manufacturing exports were negatively affected by an increase in the use of the internet in all the samples of non-OECD and OECD economies. Except for high-technology, an increase in mobile phone subscribers is associated with increased manufacturing exports in all categories of industries and all sample countries. Broadband subscriptions only positively affect exports of low-technology intensity in OECD countries and negatively affect exports of medium-technology in non-OECD countries. The economic complexity index shows a positive influence on exports in OECD and non-OECD countries except for low-technology intensity. Human capital has been found to influence manufacturing exports in OECD countries and reduce exports in non-OECD countries. In both the OECD and non-OECD countries, positive and significant effects of GDP and trade were observed in all categories of technology adoption. These findings imply that in OECD and non-OECD countries ICT is an important aspect worth considering in trade policy making due to its significant influence on exports. ICT services need to be checked by the government to ensure quality, efficient, and effective delivery for better export. Findings also support the practical significance of ICT especially in developing OECD countries.

Economic geography of talent migration and agglomeration in China: A dual-driver framework

The long-standing debate on the role of economic factors and amenities on talent migration and redistribution foreshadows the importance of spatial economic theoretical thinking in resolving the effects of duality, a point yet to be conclusively addressed in the existing literature. Situated within the framework of new economic geography (NEG), this article introduces an innovative theoretical model – the Dual-Driver (DD) framework– aiming at comprehending the nuanced dual impact of economic and amenity factors on talent movements between regions. While the DD framework retains the mechanisms of increasing returns to scale, iceberg transportation cost, and talent agglomeration presented in the NEG models, it depicts, for the first time, the self-reinforcing mechanisms between non-traded goods (i.e., amenities) and talent agglomeration. The model describes a logic of talent movements influenced by the dual drivers of regional economic factors (nominal wage, the diversity of local manufacturing products) and amenities (the diversity and quality of amenities, transfer payment for talent), among which the economic effects play a predominant role versus the amenity effects. Empirical evidence has been given by the geographical analysis of China's internal talent migration between 2000 and 2015 and the corresponding econometric analysis using the Poisson pseudo-maximum likelihood (PPML) estimation. Our findings furnish a theoretical perspective for comprehending talent geography and offer policy insights into China's logic of talent migration.

Do export responses to exchange rate movements differ in micro export flows?

This paper empirically examines how exports respond to exchange rate movements (exchange rate and exchange rate volatility) at the micro and macro levels using Turkey’s bilateral export data with 65 partner countries. Panel data contaninig 65 cross-sectional dimensions and 60 monthly time series dimensions from 2018:01 to 2022:12 are used. The empirical results of the Poisson Pseudo Maximum Likelihood (PPML) technique show that the negative effect of exchange rate volatility on micro export flows is amplified. Moreover, the potential positive effect of the exchange rate on micro export flows is weaker. Our findings are robust against the alternative method of exchange rate volatility and nominal exchange rate volatility. Our results are also intact under alternative robustness tests. The paper provides notable policy implications. Policymakers should be aware of the potential structural differences between micro and macro exports. Therefore, policymakers should also consider other aspects such as cross-border e-commerce when formulating economic policies on microexports.