Trade Creation and Diversion Effects and Exchange Rate Volatility in the Global Meat Trade

Abstract

A modified gravity model is specified and applied to meat trade markets to identify factors affecting bovine and swine meat trade flows.The model is used to evaluate the effects of bilateral and regional free trade agreements.This study reveals that gravity models can be effectively parameterized and used in single commodity trade studies.Using data from 1986 to 2009, the results show that income, population, production capacity, distance, and exchange rate volatility are major factors affecting meat trade.

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