Gravity Without Apology: the Science of Elasticities, Distance and Trade

Celine Carrere, Monika Mrázová and J. Peter Neary

The Economic Journal, 2020, vol. 130, issue 628, 880-910

Abstract: Gravity as both fact and theory is one of the great success stories of recent research on international trade, and has featured prominently in the policy debate over Brexit. We first review the facts, noting the overwhelming evidence that trade tends to fall with distance. We then introduce some expository tools for understanding constant-elasticity-of-substitution theories of gravity as a simple general-equilibrium system. Next, we point out some anomalies with the theory: mounting evidence against constant trade elasticities, and implausible predictions for bilateral trade balances. Finally, we sketch an approach based on subconvex gravity as a promising direction to resolving them.

Date: 2020
References: Add references at CitEc
Citations: View citations in EconPapers (23)

Downloads: (external link)
http://hdl.handle.net/10.1093/ej/ueaa034 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Gravity without Apology: The Science of Elasticities, Distance, and Trade (2020)
Working Paper: Gravity without Apology: The Science of Elasticities, Distance, and Trade (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:econjl:v:130:y:2020:i:628:p:880-910.

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

The Economic Journal is currently edited by Francesco Lippi

More articles in The Economic Journal from Royal Economic Society Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press () and ().