Short run gravity

James Anderson and Yoto Yotov

Journal of International Economics, 2020, vol. 126, issue C

Abstract: Short run gravity is a model of bilateral export trade serviced by fixed bilateral capacities (marketing capital) along with labor that is frictionlessly allocated across destinations. Long run efficient capacity allocation yields long run gravity, equivalent to the standard structural gravity model. The estimated short run trade elasticity is about 1/4 the long run trade elasticity. Capacity reallocation raised world manufacturing trade 75% in the globalization era, 1988–2006 – a solution to the ‘missing globalization puzzle’. Counter-factual long run equilibrium allocation of marketing capital implies world real income gains ranging from over 2% in 1989 to under 1% in 2006.

Keywords: Networks; Globalization; Trade Elasticity (search for similar items in EconPapers)
JEL-codes: F13 F14 F16 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Related works:
Working Paper: Short Run Gravity (2017)
Working Paper: Short Run Gravity (2017)
Working Paper: Short Run Gravity (2017)
Working Paper: Short Run Gravity (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:126:y:2020:i:c:s002219962030057x

DOI: 10.1016/j.jinteco.2020.103341

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