Artificial Intelligence Methods for Evaluating Global Trade Flows

31 Pages Posted: 25 Aug 2020

See all articles by Feras Batarseh

Feras Batarseh

George Mason University

Munisamy Gopinath

Oregon State University - Department of Applied Economics

Anderson Monken

Board of Governors of the Federal Reserve System

Date Written: August, 2020

Abstract

International trade policies remain in the spotlight given the recent rethink on the benefits of globalization by major economies. Since trade critically affects employment, production, prices and wages, understanding and predicting future patterns of trade is a high-priority for decision making within and across countries. While traditional economic models aim to be reliable predictors, we consider the possibility that Artificial Intelligence (AI) techniques allow for better predictions and associations to inform policy decisions. Moreover, we outline contextual AI methods to decipher trade patterns affected by outlier events such as trade wars and pandemics. Open-government data are essential to providing the fuel to the algorithms that can forecast, recommend, and classify policies. Data collected for this study describe international trade transactions and commonly associated economic factors. Models deployed include Association Rules for grouping commodity pairs; and ARIMA, GBoosting, XGBoosting, and LightGBM for predicting future trade patterns. Models and their results are introduced and evaluated for prediction and association quality with example policy implications.

JEL Classification: F13, F17, C55, C80

Suggested Citation

Batarseh, Feras and Gopinath, Munisamy and Monken, Anderson, Artificial Intelligence Methods for Evaluating Global Trade Flows (August, 2020). International Finance Discussion Paper No. 1296, Available at SSRN: https://ssrn.com/abstract=3680253 or http://dx.doi.org/10.17016/IFDP.2020.1296

Feras Batarseh (Contact Author)

George Mason University ( email )

4400 University Drive
Fairfax, VA
United States

HOME PAGE: http://https://science.gmu.edu/directory/feras-batarseh

Munisamy Gopinath

Oregon State University - Department of Applied Economics ( email )

213 Ballard Extension Hall
Corvallis, OR 97331-4501
United States
541-737-1402 (Phone)
541-737-2563 (Fax)

Anderson Monken

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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