VERIFICATION OF THE GRAVITY MODEL IN THE EXAMPLE OF UKRAINE'S INTERNATIONAL TRADE

In this paper we are testing gravity model, which predicts, that the value of trade among countries depends on the amount of Gross Domestic Product - the bigger it is, the bigger the trade is, however, it is influenced by distance of the trading countries - the further countries are located from each other, the more negative affect it has on the trading amount of the countries. This paper tests the equation on the given trading data for Ukraine. Outcome calculations show that the trade increases by 0,5 %, when trading partner's GDP rises by 1 %. If the distance between trading partner rises by 1 % than trade between this countries falls by 0,9 %.