Arbeitspapier

Gravity at Sixty: The Workhorse Model of Trade

On the eve of its 60th anniversary, the gravity model of trade is a 'celebrity', due to its intuitive appeal, solid theoretical foundations, and remarkable empirical success. Yet, many economists still view gravity simply as an intuitive but naive reduced-form estimating equation and apply it without guidance from theory, while others are skeptical about its usefulness for counterfactual projections. The objective of this paper is to offer a historical overview of its evolution from an a-theoretical application to an estimating computable general equilibrium (E-CGE) model, which can be nested in more complex frameworks. Along the way, I address some misconceptions about the gravity model, summarize the current best practices for gravity estimations, and highlight some properties that have made gravity so successful.

Sprache
Englisch

Erschienen in
Series: CESifo Working Paper ; No. 9584

Klassifikation
Wirtschaft
Trade Policy; International Trade Organizations
Empirical Studies of Trade
Trade and Labor Market Interactions
Thema
structural gravity
evolution
theory
estimation general equilibrium

Ereignis
Geistige Schöpfung
(wer)
Yotov, Yoto V.
Ereignis
Veröffentlichung
(wer)
Center for Economic Studies and ifo Institute (CESifo)
(wo)
Munich
(wann)
2022

Handle
Letzte Aktualisierung
20.09.2024, 08:23 MESZ

Datenpartner

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Objekttyp

  • Arbeitspapier

Beteiligte

  • Yotov, Yoto V.
  • Center for Economic Studies and ifo Institute (CESifo)

Entstanden

  • 2022

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