Autoregression of Bilateral Trade Flow Matrices

Guoyu Lin, Jackson Menoher, Guoxiang Lin, Jehu Mette


Amongst a considered set of trading partners, does proportional bilateral trade flow in matrix form have autoregressive predictability? In this paper, the standard method of ordinary least squares (OLS) regression is modified for the input and prediction of matrices representing proportional exports of trading partners. Considering a small sample of trading partners and using the matrix regression model proposed, we find some evidence of autoregressive predictability. This predictability can be employed to predict future trade flows among different countries. Our findings provide some potential policy implications on international trade.

Keywords: international trade; trade flow; autoregressive predictability, etc.

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