Gravity without Apologies: The Science of Elasticities, Distance, and Trade

J. Peter Neary, Carrère, Céline and Mrázová, Monika
Authors registered in the RePEc Author Service: Monika Mrazova () and Celine Carrere

No 14473, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Gravity as both fact and theory is one of the great success stories of the modern study of international trade, and has featured prominently in policy debates such as that 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 CES theories of gravity as a simple general-equilibrium system. Next, we point out some anomalies with the theory, including implausible predictions for bilateral trade balances. Finally, we sketch an approach based on subconvex gravity as a promising direction to resolving them.

Keywords: Bilateral trade balances; Brexit; Elasticity of trade to distance; Quantile regression; Structural gravity and trade; Subconvex demands (search for similar items in EconPapers)
JEL-codes: F10 F14 F17 (search for similar items in EconPapers)
Date: 2020-03
New Economics Papers: this item is included in nep-int and nep-ore
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22)

Downloads: (external link)
https://cepr.org/publications/DP14473 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
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:cpr:ceprdp:14473

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP14473

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().