| This dissertation uses the gravity model to analyze the development of the trade pattern between countries and regional trading blocs. Until recently, most studies reported in the literature have applied the gravity model to aggregated data, particularly cross-sectional or time-series data among trading countries. In this dissertation, however, the conventional gravity model is revised for the single commodity of wood products. The model is applied to panel data to determine factors affecting trade flows of US wood products.; The regression results show that the modified gravity model can be applicable to the markets for single wood products. More importantly, this modified gravity model supports the attributes of the conventional gravity model. First, from this standpoint, this study examines the link between regional trading blocs and US wood product trade flows in terms of shift and share analysis. The results show a ‘shift of gravity’ for exported wood products away from the East Asia trading bloc to the NAFTA trading bloc following the 1994 implementation of NAFTA. Second, the impacts of distance, real exchange rates, and forest and woodland areas on US wood product trade flows are investigated in three regions, NAFTA, the EU, and East Asia and Pacific Rim countries, from 1986 to 2000. The gravity model is applied in an attempt to explain the variation in the US wood product trade flows for these major trading regions. The results reveal that the impacts of distance, real exchange rates, and the forest and woodland area of the importing country on the US wood product trade have the expected signs and are statistically significant.; Third, panel data analysis is used to investigate the one-way fixed effects, random effects, and two-way fixed effect, random effects over time for each region. The study reveals that the two-way random effects model is more plausible and provides more robust results than any of the other competing models based on the Hausman test. Fourth, a Chow test is conducted to identify whether there exist structural changes in the US wood products trade with those regions before and after NAFTA implementation. The results point to a significant change in the US trade structure after NAFTA came into effect. |
