Trade Gravity Model Based On Gray System

Theoretical analysis of international trade has gained much popularity in China in recent years, owning to the frequent trade conflicts between China and other countries. A great number of analysts have done their research not only on theoretical side, but also on practical side applying econometric modeling methods to analyzing the international trade. The Gravity Model is one of the best among these methods. Another tool is the Gray Model, which is considered to be most powerful analyzing complicated system problem, and international trade happens to be this tape. So in this thesis, I combine these two models and establish a new trade gravity model based on gray system, and I use it in researching the quantitative relations of bilateral trade.Firstly, the thesis describes the principium of Gray System and the Trade Gravity model in details, explains their calculational approach, verifies methods and improves the two models. Secondly, starting with searching the relationships between simulant values and actual values of the Trade Gravity model, the thesis sets up the Trade Gravity model based on Gray System by using optimal combination forecasting. Thirdly, the thesis figures out the new model can forecasts the quantities of international trade very well by using the Trade Gravity model based on Gray System in the field of forecasts and factors analyzing of Chinese bilateral trades. Lastly, the thesis proposes that China should take part in more organizations of regional economy cooperation selectively, develop multilateral export trades and realize the distributive optimization of resources in a wider area. Also China should increase its internal demand, and make it a long-term economic policy. China should increase the additive value of its exported commodities and improve the terms of trade as well.