Review of World Economics

, Volume 142, Issue 1, pp 92–121

The Gravity Equation in International Trade in Services

Article

Abstract

The main purpose of this paper is to assess the impact of various factors on bilateral services trade, relative to that on bilateral goods trade. To accomplish this purpose, using the standard gravity model, we ran regressions on bilateral services trade and goods trade between 10 OECD member countries and other economies (including OECD member and nonmember countries) for the years 1999 and 2000. One main and interesting result is that services trade is better predicted by gravity equations than goods trade. Another interesting result is that there is a complementary relationship between goods exports and services imports.

Keywords

Trade in services trade in goods gravity model economic freedom 

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Copyright information

© The Kiel Institute 2006

Authors and Affiliations

  1. 1.Keio UniversityTokyoJapan
  2. 2.Division of Economics and International TradeKangwon National UniversityChuncheonKorea

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