The Distance Puzzle: On the Interpretation of the Distance Coefficient in Gravity Equations

Claudia Buch, Joern Kleinert () and Farid Toubal

No 1159, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: Globalization seems to have diminished the importance of geographical distance. However, empirical studies find that distance coefficients in gravity equations change little over time. This paper argues that changes in distance coefficients do not carry much information on changes in distance costs over time. Changes in distance costs are to a large extent picked up solely in the constant term of gravity models. The distance coefficient instead measures the relative difference between far way and close countries. A proportional fall in distance costs that leads to a proportional increase in economic activity would be consistent with constant distance coefficients.

Keywords: distance coefficients; gravity equations; globalization (search for similar items in EconPapers)
JEL-codes: F0 F21 (search for similar items in EconPapers)
Date: 2003
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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https://www.econstor.eu/bitstream/10419/17901/1/kap1159.pdf (application/pdf)

Related works:
Journal Article: The distance puzzle: on the interpretation of the distance coefficient in gravity equations (2004)
Working Paper: The Distance Puzzle: On the Interpretation of the Distance Coefficient in Gravity Equations (2004)
Working Paper: The Distance Puzzle: On the Interpretation of the Distance Coefficient in Gravity Equations (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:1159

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