The Gravity Equation in International Trade: A Response

2022 ◽  
Author(s):  
Thomas Chaney
Keyword(s):  
International Trade ◽  
Gravity Equation

The Gravity Equation in International Trade in Services

2006 ◽  
Vol 142 (1) ◽  
pp. 92-121 ◽  
Author(s):  
Fukunari Kimura ◽  
Hyun-Hoon Lee
Keyword(s):  
International Trade ◽  
Gravity Equation ◽  
Trade In Services

scholarly journals Gravity and Heterogeneous Trade Cost Elasticities

2021 ◽  
Author(s):  
Natalie Chen ◽  
Dennis Novy
Keyword(s):  
International Trade ◽  
Bilateral Trade ◽  
Trade Agreements ◽  
Gravity Equation ◽  
Trade Costs ◽  
Currency Unions ◽  
Trade Cost ◽  
New Approach ◽  
Substantial Heterogeneity

Abstract How do trade costs affect international trade? This paper offers a new approach. We rely on a flexible gravity equation that predicts variable trade cost elasticities, both across and within country pairs. We apply this framework to popular trade cost variables such as currency unions, trade agreements, and WTO membership. While we estimate that these variables are associated with increased bilateral trade on average, we find substantial heterogeneity. Consistent with the predictions of our framework, trade cost effects are strong for ‘thin’ bilateral relationships characterised by small import shares, and weak or even zero for ‘thick’ relationships.

scholarly journals Measuring the Unequal Gains from Trade *

2016 ◽  
Vol 131 (3) ◽  
pp. 1113-1180 ◽  
Author(s):  
Pablo D. Fajgelbaum ◽  
Amit K. Khandelwal
Keyword(s):  
International Trade ◽  
Gravity Equation ◽  
Relative Price ◽  
Gains From Trade ◽  
Price Changes ◽  
The Poor

Abstract Individuals that consume different baskets of goods are differentially affected by relative price changes caused by international trade. We develop a methodology to measure the unequal gains from trade across consumers within countries. The approach requires data on aggregate expenditures and parameters estimated from a nonhomothetic gravity equation. We find that trade typically favors the poor, who concentrate spending in more traded sectors.

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