Forecasting European International Trade Flows
POLDER M, Erasmus University of Rotterdam and MEIJEREN J VAN, NEA Transport Research and Training, The Netherlands
International trade plays an important role in world economy. On the one hand, exports are an important source of income for most countries. On the other hand, imports are necessary to compensate a lack of national re- sources, to benefit from other count
International trade plays an important role in world economy. On the one hand, exports are an important source of income for most countries. On the other hand, imports are necessary to compensate a lack of national re- sources, to benefit from other countries' comparative advantages, to satisfy consumer demand for foreign products, et cetera. Where international trade concerns goods, it triggers physical flows of freight transport. Hence, the analysis of international trade is necessary to understand and predict devel- opments in international freight transport.
In this paper, the focus will be on the size of physical bilateral trade flows on a yearly basis. Thus, the interest is in the amount of goods transported yearly from a certain country to another. In particular, the subject matter of this pa- per is the forecasting of the size of these trade flows. The outline of this paper is as follows. First, an econometric approach to the modelling of international trade flows is discussed in section 2. This section provides some history on trade modelling, and proposes several adjustments and extensions to the cur- rent approaches. Subsequently, section 3 describes the forecasting method- ology. The methodology will be applied to a selection of European trade flows. The empirical results are given in section 4. In this section, also the accuracy of the forecasts is evaluated. Finally, section 5 provides the conclu- sions to this paper and some suggestions for future research.
Association for European Transport