Abstract:

In this paper we include a multilateral resistance term to the gravity model and we estimate parameters of gravity model of trade between different countries. To solve this problem we cover 134 countries and period between 2006 and 2014. A traditional approach is to estimate panel data by fixed effects. Instead of this it is recommended to use Taylor approximation. We employ two different forms of Taylor approximation and we estimated regression model of bilateral trade by Pseudo Poisson Maximum Likelihood method.