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

Claudia Buch (1) , Jörn Kleinert (1) , Farid Toubal (2)

1 Eberhard Karls Universität Tübingen = Eberhard Karls University of Tuebingen
2 TEAM - Théories et Applications en Microéconomie et Macroéconomie

Although globalization has diminished the importance of distance, empirical gravity models find little change in distance coefficients. We argue that changing distance costs are largely reflected in the constant term. A proportional fall in distance costs is consistent with constant distance coefficients.

Mots clés: Distance coefficients; Gravity equations; Globalization

Domaines: Economies et finances

Claudia Buch, Jörn Kleinert, Farid Toubal. The Distance Puzzle: On the Interpretation of the Distance Coefficient in Gravity Equations.. Economics Letters, 2004, 83 (3), pp.293-298. ⟨10.1016/j.econlet.2003.10.022⟩. ⟨hal-00311582⟩