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The Distance Puzzle: On the Interpretation of the Distance Coefficient in Gravity Equations

Listed author(s):
  • Claudia Buch

    ()

    (Eberhard Karls Universität Tübingen)

  • Jörn Kleinert

    ()

    (Eberhard Karls Universität Tübingen)

  • Farid Toubal

    ()

    (TEAM - Théories et Applications en Microéconomie et Macroéconomie - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

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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Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number hal-00311582.

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Length:
Date of creation: 2004
Publication status: Published in Economics Letters, Elsevier, 2004, 83 (3), pp.293-298. 〈10.1016/j.econlet.2003.10.022〉
Handle: RePEc:hal:cesptp:hal-00311582
DOI: 10.1016/j.econlet.2003.10.022
Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00311582
Contact details of provider: Web page: https://hal.archives-ouvertes.fr/

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  7. Buch, Claudia M. & Kleinert, Jorn & Toubal, Farid, 2004. "The distance puzzle: on the interpretation of the distance coefficient in gravity equations," Economics Letters, Elsevier, vol. 83(3), pages 293-298, June.
  8. Jeffrey A. Frankel & Andrew K. Rose, 2000. "Estimating the Effect of Currency Unions on Trade and Output," NBER Working Papers 7857, National Bureau of Economic Research, Inc.
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  18. Toubal, Farid & Kleinert, Jörn & Buch, Claudia M., 2003. "Determinants of German FDI: New Evidence from Micro-Data," Discussion Paper Series 1: Economic Studies 2003,09, Deutsche Bundesbank, Research Centre.
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