Death of distance and the distance puzzle

Faqin Lin and Nicholas Sim

Economics Letters, 2012, vol. 116, issue 2, 225-228

Abstract: Despite the onset of globalization, year-by-year cross-country regressions of the gravity model usually suggest that the impediment of geographical distance on bilateral trade is rising, and not declining, over time. This effect of distance is dubbed the distance puzzle. In this paper, we argue that prima facie evidence of the distance effect from the year-by-year regressions may not be a good indicator of the true impact of distance on trade.

Keywords: Distance puzzle; Year-by-year regression; Extensive margin; Intensive margin (search for similar items in EconPapers)
JEL-codes: F10 F40 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (34)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:116:y:2012:i:2:p:225-228

DOI: 10.1016/j.econlet.2012.03.004

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