Dynamic gravity: endogenous country size and asset accumulation

Maria Pia Olivero () and Yoto V. Yotov

Canadian Journal of Economics, 2012, vol. 45, issue 1, pages 64-92

Abstract: Numerous gravity applications have resorted to panel data econometric techniques over the past decade. However, with the theory of gravity being so far only static, these estimations lack solid structural dynamic foundations. As a consequence, a consensus on a unified dynamic gravity estimation approach is yet to be reached. In this paper, (i) we build the theoretical foundations for a dynamic gravity model, (ii) we provide guidance for gravity-type estimations with panel data and we consider applications, and (iii) we calibrate and simulate our model to compare its properties with those of the standard, static gravity setup.

JEL-codes: F10 F11 (search for similar items in EconPapers)
Date: 2012
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