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

Author

Listed:
  • Claudia Buch

    (Eberhard Karls Universität Tübingen = University of Tübingen)

  • Jörn Kleinert

    (Eberhard Karls Universität Tübingen = University of Tübingen)

  • Farid Toubal

    (TEAM - Théories et Applications en Microéconomie et Macroéconomie - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

Abstract

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.

Suggested Citation

  • Claudia Buch & Jörn Kleinert & Farid Toubal, 2004. "The Distance Puzzle: On the Interpretation of the Distance Coefficient in Gravity Equations," Post-Print hal-00311582, HAL.
    • Handle: RePEc:hal:journl:hal-00311582
    DOI: 10.1016/j.econlet.2003.10.022
    as

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    Keywords

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    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F0 - International Economics - - General

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