The Geographic Space in International Trade: from Gravity to New Economic Geography

Gianluca Cafiso

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper we discuss the foundations of two recent trade theories linked by the role that the space-dimension plays in this kind of models. The theories discussed are the Gravity Approach and the New Economic Geography. We dedicate much to the explanation of the micro-foundations of the gravity equation and to the solution of the Border Puzzle achieved in a relevant and innovative paper by Anderson and van Wincoop. Some upto-date empirical applications, which test or use Gravity and NEG relations, are discussed in order to show how much these two theories are used in empirical trade analysis.

Keywords: Gravity; Trade Costs; Border Puzzle; Economic Geography (search for similar items in EconPapers)
JEL-codes: F10 (search for similar items in EconPapers)
Date: 2007-09
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:20269

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