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The evolution of structural gravity: The workhorse model of trade

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  • Yoto V. Yotov

Abstract

The gravity model is the workhorse model of trade. Yet, many economists still view gravity as a reduced‐form estimating equation and apply it without guidance from theory, while others are skeptical about its usefulness for counterfactual projections. This paper offers a historical overview of the evolution of gravity, from an a‐theoretical application to an estimating computable general equilibrium model, which can be nested in more complex frameworks. Along the way, I address some misconceptions about gravity, summarize the current recommendations for gravity estimations, highlight properties that have made gravity so successful, and review the latest contributions to the related literature.

Suggested Citation

  • Yoto V. Yotov, 2024. "The evolution of structural gravity: The workhorse model of trade," Contemporary Economic Policy, Western Economic Association International, vol. 42(4), pages 578-603, October.
    • Handle: RePEc:bla:coecpo:v:42:y:2024:i:4:p:578-603
    DOI: 10.1111/coep.12666
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    Cited by:

    1. Yoto Yotov, 2025. "Gravity for Undergrads," Working Papers 202534, Center for Global Policy Analysis, LeBow College of Business, Drexel University.
    2. Clara Brandi & Federico Carri-Caccia, 2025. "Preventing pollution havens? Environmental Provisions in Preferential Trade Agreements and Foreign Direct Investment," Working Papers 202513, Center for Global Policy Analysis, LeBow College of Business, Drexel University.
    3. Rebecca Freeman & Mario Larch & Angelos Theodorakopoulos & Yoto V. Yotov, 2025. "Unlocking New Methods to Estimate Country‐Specific Effects and Trade Elasticities With the Structural Gravity Model," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 40(6), pages 669-684, September.
    4. Stefani Stefanova & Sophie Bandarkar & Yoto Yotov, 2025. "A Reassessment of the Impact of the Organization for Economic Co-operation and Development on International Trade," Working Papers 202509, Center for Global Policy Analysis, LeBow College of Business, Drexel University.
    5. Sabeer, Vadakke Cholakkakath, 2025. "International migration and trade: A comparative analysis of China and India," Journal of Asian Economics, Elsevier, vol. 100(C).

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    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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