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The distance puzzle: on the interpretation of the distance coefficient in gravity equations

  • Buch, Claudia M.
  • Kleinert, Jorn
  • Toubal, Farid

Although globalization has diminished the importance of distance, empirical gravity models find little change in distance coefficients. We argue that changing distance costs are largely reflected in the constant term. A proportional fall in distance costs is consistent with constant distance coefficients.

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Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 83 (2004)
Issue (Month): 3 (June)
Pages: 293-298

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Handle: RePEc:eee:ecolet:v:83:y:2004:i:3:p:293-298
Contact details of provider: Web page: http://www.elsevier.com/locate/ecolet

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