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The Gravity of Distance: Evidence from a Trade Embargo

Author

Listed:
  • Afnan Al-Malk

    (Department of Finance and Economics, Qatar University)

  • Jean-François Maystadt

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

  • Maurizio Zanardi

    (School of Economics, University of Surrey)

Abstract

On June 5th, 2017, an airspace blockade was imposed on the state of Qatar by Bahrain, Saudi Arabia, United Arab Emirates (neighboring countries) and Egypt. We exploit this exogenous increase in air transportation costs towards non-blockading countries to examine the effect of increased travel distance, due to re-routing, on bilateral trade. Based on a gravity model estimated with a Poisson pseudo-maximum likelihood estimator, we find a distance elasticity of imports between -0.3 and -0.5. Overcoming the limitations of cross-sectional studies and taking advantage of this quasi-natural experiment, our findings are robust and revise downwards previous estimates of the distance elasticity.

Suggested Citation

  • Afnan Al-Malk & Jean-François Maystadt & Maurizio Zanardi, 2022. "The Gravity of Distance: Evidence from a Trade Embargo," LIDAM Discussion Papers IRES 2022014, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    • Handle: RePEc:ctl:louvir:2022014
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    File URL: https://sites.uclouvain.be/econ/DP/IRES/2022014.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Embargo; Distance Effect; International Trade;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation

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