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

Posted: 9 Jul 2004

See all articles by Claudia M. Buch

Claudia M. Buch

Deutsche Bundesbank

Jörn Kleinert

affiliation not provided to SSRN

Farid Toubal

Ecole Normale Superieure de Cachan (ENS) - Departement of Economics ans Management; National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST); Centre d'Etudes Prospectives et d'Info. Internationales (CEPII)

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.

Keywords: Distance coefficients, Gravity equations, Globalization

JEL Classification: F0, F21

Suggested Citation

Buch, Claudia M. and Kleinert, Jörn and Toubal, Farid, The Distance Puzzle: On the Interpretation of the Distance Coefficient in Gravity Equations. Economics Letters, Vol. 83, No. 3, pp. 293-298, 2004. Available at SSRN: https://ssrn.com/abstract=562903

Claudia M. Buch

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

Jörn Kleinert (Contact Author)

affiliation not provided to SSRN

Farid Toubal

Ecole Normale Superieure de Cachan (ENS) - Departement of Economics ans Management ( email )

France

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST) ( email )

15 Boulevard Gabriel Peri
Malakoff Cedex, 1 92245
France

Centre d'Etudes Prospectives et d'Info. Internationales (CEPII) ( email )

9 rue Georges Pitard
Paris Cedex 15, F-75015
France

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