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Gravity, Distance, and International Trade

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  • Scott L. Baier
  • Amanda Kerr
  • Yoto V. Yotov

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.

Suggested Citation

  • Scott L. Baier & Amanda Kerr & Yoto V. Yotov, 2017. "Gravity, Distance, and International Trade," CESifo Working Paper Series 6357, CESifo.
  • Handle: RePEc:ces:ceswps:_6357
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    More about this item

    Keywords

    structural gravity; estimation; simulation; transportation costs;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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