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Death of distance and the distance puzzle

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  • Lin, Faqin
  • Sim, Nicholas C.S.

Abstract

Despite the onset of globalization, year-by-year cross-country regressions of the gravity model usually suggest that the impediment of geographical distance on bilateral trade is rising, and not declining, over time. This effect of distance is dubbed the distance puzzle. In this paper, we argue that prima facie evidence of the distance effect from the year-by-year regressions may not be a good indicator of the true impact of distance on trade.

Suggested Citation

  • Lin, Faqin & Sim, Nicholas C.S., 2012. "Death of distance and the distance puzzle," Economics Letters, Elsevier, vol. 116(2), pages 225-228.
    • Handle: RePEc:eee:ecolet:v:116:y:2012:i:2:p:225-228
    DOI: 10.1016/j.econlet.2012.03.004
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General

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