Gravity, Distance, and International Trade

76 Pages Posted: 23 Mar 2017

See all articles by Scott L. Baier

Scott L. Baier

Clemson University - John E. Walker Department of Economics

Amanda Kerr

Clemson University - John E. Walker Department of Economics; University of Evansville

Yoto Yotov

Drexel University - Department of Economics & International Business

Date Written: February 27, 2017

Abstract

We review and interpret the main theoretical developments in the gravity literature from its very early, a-theoretical applications to the latest structural contributions. We also discuss challenges and implement methods to estimate empirical gravity equations. We finish with a presentation and examples of numerical simulations with the structural gravity model. Throughout the analysis we attempt to emphasize the links and importance of transportation costs for the trade literature and we outline avenues where we believe interdisciplinary contributions between the international trade and transportation economics fields will be most valuable.

Keywords: structural gravity, estimation, simulation, transportation costs

JEL Classification: F100, F430, O400

Suggested Citation

Baier, Scott Leonard and Kerr, Amanda and Yotov, Yoto, Gravity, Distance, and International Trade (February 27, 2017). CESifo Working Paper Series No. 6357, Available at SSRN: https://ssrn.com/abstract=2938999

Scott Leonard Baier

Clemson University - John E. Walker Department of Economics ( email )

Clemson, SC 29634
United States
864-656-4534 (Phone)

Amanda Kerr

Clemson University - John E. Walker Department of Economics ( email )

Clemson, SC 29634
United States

University of Evansville ( email )

Evansville, IN 47722
United States

Yoto Yotov (Contact Author)

Drexel University - Department of Economics & International Business ( email )

3141 Chestnut St.
Philadelphia, PA 19104
United States

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