Has Distance Died? Evidence from a Panel Gravity Model

Posted: 2 May 2007

See all articles by Jean-François Brun

Jean-François Brun

affiliation not provided to SSRN

Céline Carrère

University of Geneva

Patrick Guillaumont

Universite d'Auvergne - Clermont 1 - CERDI

Jaime de Melo

University of Geneva - Department of Political Economics; Centre for Economic Policy Research (CEPR); World Bank

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Abstract

This paper addresses the distance "puzzle" in the gravity model of trade according to which the estimated coefficient of distance is generally found to increase rather than decrease through time. After having shown that the puzzle is a robust finding in our large sample of 130 countries over the period 1962-1996, it is shown that the introduction of an "augmented" barrier-to-trade function removes the paradox, yielding a decline in the estimate of the elasticity of trade to distance of about 11% over the thirty five year period for the whole sample, but that the "death of distance" is largely confined to bilateral trade between rich countries.

Keywords: Gravity Model, Transport Costs, Econometrics of panel data

JEL Classification: F11, C23, L91

Suggested Citation

Brun, Jean-François and Carrère, Céline and Guillaumont, Patrick and de Melo, Jaime, Has Distance Died? Evidence from a Panel Gravity Model. World Bank Economic Review, Vol. 19, No. 1, 2005, Available at SSRN: https://ssrn.com/abstract=982938

Jean-François Brun

affiliation not provided to SSRN

No Address Available

Céline Carrère (Contact Author)

University of Geneva ( email )

102 Bd Carl-Vogt
Genève, CH - 1205
Switzerland

Patrick Guillaumont

Universite d'Auvergne - Clermont 1 - CERDI ( email )

65 Boulevard Francois Mitterrand
63000 Clermont-Ferrand Cedex 1
France

Jaime De Melo

University of Geneva - Department of Political Economics ( email )

40, boulevard du Pont-d'Arve
Geneva 4, CH-1211
Switzerland
+41 22 705 8273 (Phone)
+41 22 705 8293 (Fax)

HOME PAGE: http://www.unige.ch/ses/ecopo/demelo/Jaime.html

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

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